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National student loan default rate lowest ever
Archive
According to a U.S. Department of Education report, the national student loan default rate is at an all-time low of 6.9 percent, down significantly from a 22.4 percent peak in 1992. According to U.S. Secretary of Education Richard W. Riley, the low default rates are especially noteworthy considering the fact that loan volume has tripled, and the number of loans doubled during the same period that the rate declined by more than two-thirds. According to the Clinton Administration, this is due to more aggressive enforcement and a “robust” economy.
According to David Tolman, who just assumed his position as director of the BSU Financial Aid office, defaulting can result in long-term effects.
“The consequence of default, at a minimum, is a bad credit report and could go so far as garnishment of wages,” he said.
Loans go into default after about nine months of failure to pay, or to make arrangements. Defaulters may also face denial of further student aid, and in some cases, legal prosecution.
In addition to students, schools with high default rates also come under fire. Schools with default rates of 25 percent or greater for three consecutive years may be dropped from federal student aid programs. Boise State is running at 7.9 percent. (These statistics, and the federal statistics, are for the 1998 fiscal year because of the way defaults are reported).
Borrowers who believe they may be in default should contact the holder of the loan to arrange payment or consolidation options. For loans currently being handled by the Department of Education, the number is 1-800-621-3115.