Student Loan Defaults Increase Across All Sectors

More recent graduates are failing to meet their student loan repayment obligations, forcing them to default on their debt. A new report from the Department of Education shows student loan defaults have increased across all types of educational institutions, most notably for-profit colleges.

The national default rate for fiscal year 2008 grew to 7 percent, up from 6.7 percent recorded in 2007. The Department of Education measures the data by looking at a group of borrowers whose repayment period began between October 1, 2007, and September 30, 2008. Those who defaulted before September 30, 2009, are included in the measurement.

Data shows public institutions saw an increase in the default rate between 2007 and 2008, which grew from 5.9 to 6 percent. The rate also climbed from 3.7 to 4 percent for private institutions and 11 percent to 11.6 percent at for-profit colleges.

Although the Department of Education has pushed more programs such as income-based repayment plans to offer some form of debt relief to borrowers, high unemployment rates continue to be an obstacle for young adults.