The Department of Education released recent data that stated approximately 8.8 of all student loan borrowers defaulted in the fiscal year that ended September 30, up 7 percent from the previous year.
Public institutions suffer from a rate of 7.2 percent, up from 6 percent, and not-for-profit private institutions suffer from a rate of 4.6 percent, up from 4 percent.
The deputy under secretary of education, James Kvaal, says that borrowers are struggling in this economy. He also stated that there is a strong relationship between student default rates and unemployment rates.
These default rates are the highest since 1997; they were 8.8 percent in 1997, as well. However, the highest unemployment rates occurred in 1990, when they were 20 percent.
Though the rates are high, education remains to be a very important factor for a recovering economy. In fact, secondary education has become the concern of the nation. Without higher education, the economy will continue to suffer. Economy experts urge single parents, laid off workers and young adults to enroll in some type of secondary education.
More importantly many students do not realize that there are programs designed to help them pay off their debt. These programs allow borrowers to pay based off of their household income, as little as 10 percent. Within 20 years, their debt will be paid.
What happens when you default on your student loan?
