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Student Loan Defaults Are Still Rising - U. S.

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The student loan default rate continued to rise in fiscal year 2008, the latest period for which data is available, with default rates for students at for-profit colleges — already the highest — rising the fastest.

Education Secretary Arne Duncan announced Monday morning that the overall student loan default rate for fiscal year 2008 was 7 percent, up from 6.7 percent the previous year.

The rates increased to 6 percent from 5.9 percent at public institutions, to 4 percent from 3.7 percent for private institutions and to 11.6 percent from 11 percent for for-profit institutions.

The default rates represent a snapshot in time, including only those borrowers whose first loan repayments came due from Oct. 1, 2007, to Sept. 30, 2008, and who defaulted before Sept. 30, 2009. Those who defaulted later were not included in the data; over time, default rates increase substantially.

During the period in question, almost 3.4 million borrowers entered repayment, and more than 238,000 defaulted on their loans.

“This data confirms what we already know: that many students are struggling to pay back their student loans during very difficult economic times,” Mr. Duncan said, in a statement Monday. “The data also tells us that students attending for-profit schools are the most likely to default. While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not. Far too many for-profit schools are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use.”

Luckily the recovery is in full swing so these numbers are probably at peak already.

Thank god US unemployment is hovering around 10%.

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