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Thursday, March 17, 2011

For each student who defaults on a loan, at least two more fall behind on payments

A new report by the Institute for Higher Education Policy has some interesting findings.

The study, based on data from five of the nation’s largest student-loan agencies, found that only 37 percent of student borrowers who started repaying their loans in 2005 were able to fully pay them back on time during the subsequent five year period.

For each student who defaults on a loan, at least two more fall behind in payments on their student debt. And these numbers are from a period (those starting to pay back their loans in 2005) when the economy was thriving. Do you think the results look better during the last couple of years of our recession?

What all these studies fail to consider is what the default rates are based on the amount borrowed and the major studied. Do you think the default rates might be higher for an English major that has borrowed $100,000 than a Petroleum Engineering major that only borrowed $20,000?

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