The Phaserl


Student Loan Default Rate Inching Upwards

from Silver Vigilante:

Student debt loans spell a certain collapse for the US. Now over $1 trillion, the only industry the loans are helping is debt collection. There is a proverb which reads: “a little bit of debt is the borrowers’ problem, while a lot of debt is the lenders.” And student loans represent a lot of debt. The percentage of student borrows who defaulted on their federal student loans within two years of their first payment jumped to 9.1% in fiscal year 2011, up from 8.8% the previous years, according to Department of Education data released Friday. Therefore, of the 4.1 million borrowers required to begin payments on their student loans in the 12 months prior to October 2010, 375,000 defaulted before September 2011. A borrower falls into default upon missing payments for 270 consecutive days. 13.4% of borrowers defaulted within three years of their first payment, according to the first three-year report published by the Department of Education. Starting in 2014, the Department will release solely three-year rates. 218 colleges and universities nationwide had three-year default rates of more than 30%.

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1 comment to Student Loan Default Rate Inching Upwards

  • Will

    One of the things I don’t see most of these articles addressing is the overhaul that Congress and President Obama passed with Obamacare in 2010. A lot of debtors will get relief by being able to do what they call income-based repayment. They can make monthly payments as low as $10 or even $0 depending on their income level and family size. I’m not saying that makes the situation any better aside from keeping them out of default and potentially forgiving the remainder of their debts after 20 or 25 years of payments. (Does anybody on this site even believe this system will hold up that much longer?) It certainly allows debt loads to keep rising and college costs to soar even higher, fueling the bubble and keeping money going to the college industrial complex’s big wigs.

    The other growing crisis is in private student loans. Lenders like Sallie Mae are handing out loans to teenagers with no credit and no cosigners and jacking interest rates up to 25% or higher. They have to allow student debt (especially private loans) to be treated like just about any other debt in bankruptcy court and destroy this thing (and stop sending EVERYONE to college like it’s where they all belong).

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