After five years of declines in student loan default rates, data released by the U.S. Department of Education shows that borrowers not making payments on their federal student loans within three years of graduating college has increased.
Here’s what you need to know.
Student Loan Defaults: Slight Increase
While the increase on an absolute basis is relatively small, the student loan default rate is a closely-watched barometer by colleges and universities, the federal government, borrowers, lenders and other student loan market stakeholders.
Here is the how the data breaks down:
- Total Default Rate: 11.5% (previous: 11.3%)
- Total Number of Borrowers Who Defaulted In Last 3 Years: 580,671
- Time Period Measured: October 1, 2013 – September 30, 2016
- Public Colleges Student Loan Default Rate: 11.3% (previous: 11.3%)
- Private Colleges Student Loan Default Rate: 7.4% (previous: 7.0%)
- For-Profit Colleges Student Loan Default Rate: 15.5% (previous: 15.0%)
According to the non-profit Institute for College Access and Success, there are a record 8.5 million federal student loan borrowers who are in default as of June 30, 2017.
According to The Washington Post, there are millions of people who did not make a payment on approximately $144 billion in federal student loans for at least nine months as of June 2017, a 12% increase in defaults from one year prior.
A default occurs when a borrower has not made payment on a student loan for at least 270 days.
Student loan defaults from a particular college or university can impact the school’s ability to access federal financial aid.
For example, the Education Department can penalize schools with default rates greater than 30% for three consecutive years, or 40% in a single year.
