Education Department Reports Decline in Student Loan Defaults

The Education Department has reported that there has recently been a drop in the amount of Americans that have student loans that are going into default. This drop is being attributed to the improvement in the economy and the increase in enrollment in the federal debt forgiveness programs that are popping up.

The report from the Education Department shows that of the students that left school in 2011, about one in seven had loans in default within three years of graduating. The new figure of 13.7% in default is down from what is was reported previously at 14.7%

Arne Duncan, the Education Secretary finds this decrease promising but still feels that the rates are too high. He hinted at working towards continuing efforts “to help borrowers by providing more flexible repayment options.”

The recession was a catalyst for student loan holders, and the burden of the high unemployment rates caused the amount of loans in default to skyrocket. The noticeable decline will ease the burden on students even more so as the economy improves over time.

Schools are often sanctioned by the government when a large amount of federal loans are in default and there have even been threats of reducing federal funding for 21 schools with this issue. The Obama Administration has taken note of this issue though and has altered the policy slightly to help schools avoid taking such a hit given the economic climate.

Despite the criticism that this change received from a few for-profit schools, the Education Department said that the policy change is applicable to them as well. The ultimate goal was to help student and institutions, not exclude them.

Mitchell, J. (2014, September 24). Defaults on Federal Student Loans Decline. Retrieved September 26, 2014, from

Leave a Reply

Your email address will not be published. Required fields are marked *