Currently, One in seven borrowers have defaulted on their federal student loans, which proves that former students are buckling under higher-education costs in a weak economy, Bloomberg News reported yesterday. The default rate, for the first three years that students are required to make payments, was 14.7 percent, up from 13.4 percent the year before, the U.S. Education Department said yesterday. Based on a related measure, defaults are at the highest level since 1995. U.S. borrowers owe $1.2 trillion in student-loan debt — including government loans and those from private lenders such as SLM Corp., commonly called Sallie Mae. That sum surpasses all other kinds of consumer borrowing except for mortgages.
Public colleges reported a 13 percent default rate while nonprofit private schools had a rate of 8.2 percent. For-profit colleges fared the worst, at almost 22 percent.
Under the older two-year measure, the rate for all colleges was 10 percent, up from 9.1 percent the year before — and the highest since 1995.