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Student-Loan Default Rates Rise as Federal Scrutiny Grows

Posted By Adan On September 29, 2012 @ 9:59 am In Tile,U.S. News | Comments Disabled

John Hechinger and Janet Lorin
Bloomberg
September 29, 2012

More than one in 10 borrowers defaulted on their federal student loans, intensifying concern about a generation hobbled by $1 trillion in debt and the role of colleges in jacking up costs.

The default rate, for the first three years that students are required to make payments, was 13.4 percent, with for-profit colleges reporting the worst results, the U.S. Education Department said today.

The Education Department has revamped the way it reports student-loan defaults, which the government said had reached the highest level in 14 years. Previously, the agency reported the rate only for the first two years payments are required. Congress demanded a more comprehensive measure because of concern that colleges counsel students to defer payments to make default rates appear low.

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