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Federal Loan Default Rates Rise

September 28, 2017
 
 

Federal student loan default rates are on the rise after four years of declines, according to the U.S. Department of Education's annual release of loan default data.

The federal rate is based on borrowers who have been in repayment for three years. Of the group of roughly five million borrowers who entered repayment in 2014, 11.5 percent defaulted on their loans. That was a slight increase from the rate of 11.3 percent for last year's cohort. The rate began falling four years ago after hitting a peak of 14.7 percent. The Obama administration had attributed some of the declining rate to the growing popularity of income-driven repayment plans.

Ten colleges had rates that exceeded either the federal limit for a single year (at least 40 percent of borrowers in default) or for three years (at least 30 percent), according to the department. Those institutions included several barber and cosmetology colleges, as well as Daymar College, a for-profit based in Ohio, and Southeast Kentucky Community and Technical College.

By failing to hit department-mandated thresholds, those 10 institutions could lose access to federal financial aid.

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