CAPPS - Avocacy and Communication Professional Development

California Association of Private Postsecondary Schools

Default Rate on Federal Student Loans Climbs Again

10/01/2013

The Chronicle of Higher Education.  September 30, 2013.  The percentage of borrowers who defaulted on their federal student loans within two years of entering repayment has risen again, to 10 percent, according to datareleased on Monday by the U.S. Department of Education.

That rate, among the cohort for the 2011 fiscal year, is up from the 9.1 percent two-year default rate set the previous year.

For the second time, the department also formally released default rates for federal student loans measured over a three-year window: 14.7 percent of borrowers who entered repayment during the 2010 fiscal year defaulted within three years, up from 13.4 percent who entered repayment during the 2009 fiscal year. Proprietary institutions had the highest average three-year default rates, at 21.8 percent, down slightly from the previous rate of 22.7 percent.

The department said six institutions—Huntington School of Beauty Culture, in Huntington, W.Va., Tidewater Tech, in Norfolk, Va., John Wesley International Barber & Beauty College, in Long Beach, Calif., Pacific Coast Trade School, in Oxnard, Calif., Palladium Technical Academy, in El Monte, Calif., and New Age Training, in New York, N.Y.—faced possible sanctions for having two-year default rates of 25 percent or more in three consecutive years. Two more—Henri’s School of Hair Design, in Fitchburg, Mass., and Florida Barber Academy, in Pompano Beach, Fla.—are subject to sanctions for having default rates higher than 40 percent in the cohort for the 2011 fiscal year.

No institutions will face sanctions based on their three-year default rates until three years of data have been collected.