More than 13 percent of student loan borrowers are defaulting on their loans during the first three years of repayment, with students from for-profit colleges topping the list of defaulters, the U.S. Education Department said Friday.
Seeking jobs in an uneven economy, recent graduates and others leaving school are struggling to make repayments, the data show. Among those who attended for-profit colleges, 22.7 percent of were in default in 2011. Default rates were 11 percent at public institutions and 7.5 percent at private non-profit institutions.
“We continue to be concerned about default rates and want to ensure that all borrowers have the tools to manage their debt,” said Arne Duncan, U.S. secretary of education. “In addition to helping borrowers, we will also hold schools accountable for ensuring their students are not saddled with unmanageable student loan debt.”
The new data represent the federal government’s first official rates on borrowers who default during the first three years of repayment. Previously, the official rate was only for defaulters in the first two years of required repayment. Congress authorized the change in 2008 saying the three-year rate should reflect more accurately the number of defaulters over time.
During this transition, however, the federal government also is continuing to collect data on defaults after two years. For 2011, that rate was 9.1 percent, up slightly from the previous year.
Yet looking over a longer period of time is critical, said Debbie Cochrane, research director at The Institute for College Access and Success (TICAS). “By tracking defaults for a longer period of time, the new three-year rates capture more of what’s really happening to borrowers,” she said.
A frequent critic of for-profit colleges, TICAS said the new data provide more information on the struggles of students in this sector. For example, it noted, while for-profits enroll only 13 percent of higher education students, they account for 47 percent of defaulters.
