The rate at which borrowers default on their student loans continues to drop, reflecting years of work by government officials, lenders, colleges and others to improve borrower education, monitoring, and collection efforts.
Of borrowers who began repaying their loans between October 1, 2002, and September 30, 2003, just 4.5 percent had defaulted on those loans by September 2004, the U.S. Education Department announced Wednesday. That was down from 5.2 the previous year, and is the latest in a string of decreases from the high water mark of 22.4 for the "cohort" of borrowers who entered repayment in 1992.
"There's a coordinated campaign among all partners in the federal loan programs to focus attention on student loan repayment -- and it's working," the U.S. education secretary, Margaret Spellings, said in a news release. "Financial awareness outreach to students and families, and targeted intervention when needed have paid off, resulting in significant savings to taxpayers."
As has historically been the case, private nonprofit institutions collectively had the lowest rate of default for their students, and for-profit institutions had the highest rate, as shown in the following table:
Federal Default Rates on Student Loans 2001-3, By Type of College
|Type of institution||Percentage of Students Defaulting||Percentage of Students Defaulting||Percentage of Students Defaulting|
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