Student Loan Default Rate Lowest Ever
By Ben Hammer
The U.S. Department of Education’s efforts to assist student loan borrowers are paying off, says Education Secretary Roderick Paige. The nation’s student loan default rate has dropped to an all-time low of 5.4 percent, and for the first time ever, all schools have rates low enough to ensure they remain eligible for federal financial-aid programs, Paige said last month.
Paige applauded improved efforts by the financial-aid community to counsel borrowers and to inform them of the numerous flexible repayment options designed to meet individual repayment needs.
The national default rate has dropped nearly every year since 1990, when it peaked at 22.4 percent. The fiscal year 2001 rates released represent the most current data available and include data on borrowers who attended some 6,200 schools that participate in the Federal Family Education Loan and William D. Ford Federal Direct Loan programs. The FY 2001 default rate is a snapshot in time of borrowers who began repaying their loans between Oct. 1, 2000, and Sept. 30, 2001, and who defaulted before Sept. 30, 2002.
Paige also said the department has been working with its student-aid partners to increase efforts to identify borrowers who appear to need repayment assistance and to generally improve the overall management of the student-aid programs.
Paige noted that the current interest rates on federal Stafford Loans are now at an all-time low of 3.42 percent, making loan payments more affordable. As recently as three years ago, the interest rate was more than double — 8.19 percent. The president’s FY 2004 budget request would provide more than $62 billion in student aid to 9.2 million students, an increase of $3.1 billion from the previous year. The Pell Grant program would increase to $12.7 billion — $4 billion more than when the president took office.
Borrowers needing assistance on repaying their student loans should contact the holders of the loans to learn about repayment options. For help locating their loan holders, borrowers may access
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