College Loan Default Rates Rise, Report Says

The number of college students who defaulted on their federal student loans climbed in the fiscal year that ended in September 2008, according to new government data released Monday.

And once again, those who attend for-profit colleges and universities were the most likely to default.

Figures from the U.S. Department of Education show 7 percent of borrowers of federal student loans defaulted within two years of beginning repayment, up from 6.7 percent the previous year and 5.2 percent the year before that.

Default rates crept up in all sectors of higher education -- from 3.7 to 4 percent for private nonprofit schools, 5.9 to 6 percent for public nonprofit schools, and 11 to 11.6 percent for for-profit schools.

The data covers borrowers whose first loan repayments came due between Oct. 1, 2007, and Sept. 30, 2008, and who defaulted before Sept. 30. 2009.

Students at for-profit schools represented 26 percent of federal loan borrowers and 43 percent of all defaulters in 2008-09, the department says.