Loan Study on Students Goes Beyond Default Rates

For each student who defaults on a loan, at least two more fall behind in payments on their student debt, a new study has found.

The Institute for Higher Education Policy, a nonprofit organization, said in a report that two out of five student loan borrowers were delinquent at some point in the first five years after they started repaying their loans.

Almost a quarter of the borrowers used an option to postpone payments to avoid delinquency.

With tuition rising more rapidly than inflation or family incomes, student borrowing has been growing. College seniors who graduated in 2009 had an average of $24,000 in student loan debt, up 6 percent from 2008, according to an annual report from the Project on Student Debt.

Mark Kantrowitz, the publisher of Finaid.org and Fastweb.com, estimates total student debt at about $896 billion — more than the nation’s credit-card debt.

Meanwhile, default rates have been rising, to 7 percent, for the 2008 fiscal year, the latest period for which data is available, from 5.2 percent in the 2006 fiscal year.

Students who did not graduate were more likely to become deliquent or default.

The new numbers are likely to be used in the Congressional debate over for-profit colleges. Those colleges’ students make up about 12 percent of the nation’s college enrollment, and get a quarter of all federal student aid — but they account for almost half of all students who default.