A sign of the times. Student loans default rates for 2009 increased to 8.8% from 7.0%. For profit schools had the worst jump, from 11.6% to 15%. Private universities and colleges had the lowest, but also increased from 4.0% to 4.6%. Public higher education had a 7.2% default rate, up from 6.0%. These numbers are only for a two year time window. Defaults after that 24 month period are not part of this tally.
The rates announced today represent a snapshot in time, with the FY 2009 cohort consisting of borrowers whose first loan repayments came due between Oct. 1, 2008, and Sept. 30, 2009, and who defaulted before Sept. 30, 2010. More than 3.6 million borrowers from 5,900 schools entered repayment during this window of time, and more than 320,000 defaulted.
Even more horrific these numbers had the new repayment option incorporated where one could scale and cap student loan payments based on their income.
Since the time when the borrowers in the FY 2009 cohort enrolled, the Obama Administration has expanded flexible loan repayment options for borrowers through the income-based repayment plan (IBR). This plan makes loan payments more affordable by capping the monthly payment at an amount based on income and family size.
These numbers are also after another policy change. Schools with high default rates are sanctioned and can lose eligibility for federal student loans. There were actually 5 schools cited in the press release with high default rates:
his year, five schools are subject to sanctions for cohort rates that either exceeded 25 percent for three consecutive years, exceeded 40 percent in the latest year, or both. Four are proprietary schools: Tidewater Technical, Norfolk, Va.; Trend Barber College, Houston, Texas; Missouri School of Barbering & Hairstyling, St. Louis, Mo.; and Sebring Career School, Houston, Texas. The fifth school is a private school: Human Resource Development & Employment - Stanley Technical Institute, Clarksburg, W.Va.
The department of education has put online a database, where individual schools and their associated default rates are listed.
Considering education costs more and more and there is a jobs crisis, which has hit some states harder than others, about the only thing one can say from this press release is the unemployment rate in August 2011 for those aged 20-24 was 14.8%.
A Rutgers study on employment for recent college graduates in 2009 showed only 55.5% of college graduates had obtained work in their fields, and a full 22.5% didn't have any job, at all, not even a low paying burger flipper job. Of the ones that did get a full-time job where a college degree was required, the starting salaries were about 10% lower in comparison to starting salaries before the recession.