Student loan default clawing way upward

Student loan debt and default are on the rise. It has already exceeded charge card debt on the public books, and experts do not see a roof. Federal student loan default was up substantially in fiscal 2010, reports the U.S. Department of Education. Across all colleges, the default rate hit 8.8 percent. The number increased to 15 percent within the first two years of repayment when filtering on for-profit colleges. Resource for this arti-cle: Student loan default at highest level in years

Enormous rise in student loan de-fault

The increase in student loan default was significant on all levels, reports the New York Times. From 2009 to last year, there was a rise from 11.6 percent to 15 percent in the amount of de-fault for for-profit schools. For the same years, respectively, default at public institutions went from 6 percent to 7.2 percent, and all U.S. schools saw an uptick from 7 percent default to 8.8 percent. In 1997, the loan default rate was at 8.8 percent, making this the worst it has been since that time. The rate has gone down from 1990 though. Back then, the rate was at 20 percent.

“Borrowers are struggling in this economy,” said James Kvaal, deputy undersecre-tary of education. “We see a strong relationship between student default rates and unemploy-ment rates.”

Following patterns shown

There are two students behind in their student loan payments for every student loan default that there is, as shown in an investigation done by the Insti-tute for Higher Education Policy. There are not several students that don’t miss payments. In fact, for students that started paying off loans in 2005, only 37 percent ha-ven’t been late and have not missed payments. The Department of Education is concerned and wants to know what the problem really is. They will do a bigger sample window to figure it out.

Schools are responsible

One side of the student loan default dilemma not frequently publicized is what occurs to colleges with probably the most students who experience loan default. According to Kvaal, multiple universities - four of them for-profit - lost federal student aid eligibility. About 80 percent of revenue at for-profit universities comes from tuition. That is why it is simple to see this. Programs that used to be essential to survival were stopped by many of these colleges. The long-term effects of student loan default on such universities remains to be seen.

Large increases in tuition costs

Borrowing is still going up regardless of the recession and high unemployment. Even though family incomes and inflation have unsuccessful to keep pace with the cost of going to university, many students feel as though they're mired in a grim catch-22. Students typically don't want to default on student loans. Still, it is occasionally the only thing to take place when there are not jobs accessible and students aren’t able to get jobs anymore.

Increased graduation rates not coming from more debt

Information from

New York Times Student loan default (U.S.) Wiki U.S. Department of Education