Student Loan Default Rate Drops

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The proportion of student loan borrowers who defaulted on their debt within three years fell to 11.8 percent for those entering repayment in 2012, down sharply from 13.7 percent the year before, the U.S. Education Department announced today. Department officials credited the Obama administration's various efforts to protect borrowers, including its push to encourage borrowers to enter its income-based repayment program, for some of the decline in the default rate.

A list of institutions that could face the loss of eligibility for federal student aid programs because of their high default rates is below. The list contains no historically black colleges and universities, but the department appears not to have taken the extraordinary measures it took last year (when it adjusted the data of some institutions facing the loss of federal aid to protect them, drawing sharp criticism) once again. In a separate statement, the department said, “As of September 2015, all 101 eligible HBCUs have official … three-year cohort default rates that fall below regulatory thresholds,” and credited the historically black colleges with using “innovative approaches” to keeping their default rates down.

The cohort default rate, as this measure is known, has been the federal government's primary way of holding colleges accountable for how their students fare postgraduation, despite widespread dissatisfaction with the rigor of the default rate tool. The Education Department recently published data on the loan repayment rates of individual colleges' borrowers, which some see as a tougher and better way of gauging the fate of student loan borrowers.

Institutions subject to loss of aid: