A larger share of borrowers is falling behind on their student loan payments, according to data released today by the U.S. Department of Education.
The share of borrowers defaulting on their student loans two years into their payments was 9.1 percent for fiscal year 2010, up from 8.8 percent for the previous year, according to a report released today by the U.S. Department of Education. The default rate rose to 13.4 percent for students who began repaying their loans three years ago.
“We continue to be concerned about default rates and want to ensure that all borrowers have the tools to manage their debt,” Arne Duncan, U.S. Secretary of Education, said in a statement. “In addition to helping borrowers, we will also hold schools accountable for ensuring their students are not saddled with unmanageable student loan debt.”
Two schools are subject to sanctions for having two-year default rates of 25 percent or more for three consecutive years. The Centro de Estudios Multidisciplinarios in San Juan, Puerto Rico, and Tidewater Tech in Norfolk, VA, face the loss of eligibility for federal student aid programs.
The two-year default rates reflect loans with payments first due between October 2009 and September 2010, and which entered default before September 2011. Of the 4.1 million borrowers who began repaying loans during this interval, nearly 375,000 defaulted, according to the education department.
The three-year rates reflect loans entering repayment between October 2008 and September 2009, and who defaulted before September 2011. Of the 3.6 million borrowers who held such loans, an estimated 489,000 defaulted. For-profit institutions had the highest average three-year default rate of 22.7, followed by public institutions at 11 percent and private non-profit institutions at 7.5 percent.
Borrowers with student loan debt can obtain information about repayment options on the education department website. The income-based repayment plan allows borrowers to cap their monthly student loan payments at 15 percent of discretionary income. The website also provides an interactive tool to help borrowers with their financial aid decisions.