College student loan defaults

11:36 AM, Sep 28, 2012   |    comments
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By Meghan Hoyer, USA TODAY

Student loan defaults have risen for the fifth straight year, as students from traditional non-profit universities are having an increasingly difficult time paying off their college debt.

Numbers released by the Department of Education Friday show that of the 4.1 million borrowers who began making payments in late 2009 and early 2010, 9.1% defaulted within two years, up from 8.8% the year before.

Experts credited the combination of skyrocketing student debt and the poor economy for the increase. Unlike previous years, when default rates rose because of borrowers at for-profit universities, this year's rise was attributed to borrowers who attended more traditional non-profit public and private universities. Public school borrowers defaulted at a rate of 8.3%, up from 5.9% just four years ago.

For the first time in four years, the for-profit school default rate dropped from the previous year, to 12.9% from 15%.

According to the Project on Student Debt, two-thirds of college seniors graduating from non-profit four-year colleges in 2010 had student loan debt, and the average owed was $25,250 -- up 5% from a year earlier. Unemployment rates among young college graduates, meanwhile, was 9.1% in 2010.

A study from the Pew Research Center released this week found that one-fifth of all the nation's households owed some student debt in 2010.

The default figures released Friday count borrowers who began their repayment in fiscal year 2010 -- meaning they are mostly graduates in the 2009 class -- and measures the percentage who fell at least nine months behind in their payments by September 2011. The data don't measure borrowers who default later in the life of the loan.


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