Washington -- The nation's student loan default rate has reached its lowest level ever, according to the U.S. Education Department (ED), which nonetheless identified more than 300 colleges and universities that could lose their right to participate in student-aid programs because of excessive defaults.

Only 10.7 percent of former students were in default on their loans in 1994, the most recent year for which data were available. This rate is less than half the 22.4 percent rate recorded in 1990.

ED officials credited new enforcement power, improved collections and an improving economy for the turnaround. "We have used every tool available to slash the default rate and save taxpayers hundreds of millions of dollars, and these efforts will continue," said Education Secretary Richard Riley.

However, ED also has the power to deny schools access to financial aid dollars if their default rates exceed 25 percent for three consecutive years or 40 percent in the most recent year.

Historically Black colleges and universities and tribally controlled schools and colleges are exempt from these rules through July 1998. However, Congress will re-examine the exemption during reauthorization of the Higher Education Act (HEA).

College officials already have told ED about the need to continue the exemption beyond next year, said Elizabeth Hicks, deputy assistant secretary for student financial assistance. ED solicited input at a series of regional hearings that ended in December. The department will use these comments when designing their own reauthorization proposals, which are expected by spring.

During the past year, ED has deemed 144 schools as no longer eligible to participate in student loan programs because of high default rates. Private trade and technical schools make up the bulk of these institutions.

For-profit trade schools also make up the bulk of the more than 300 institutions identified as at risk of losing eligibility in ED's latest report. About two dozen schools are public or private two- and four-year colleges. Most of the non-trade schools are two-year community colleges or small, four-year, religiously affiliated institutions.