The number of people defaulting on their student loans jumped dramatically this year, with students and graduates of for-profit schools falling deepest into financial trouble, according to a report released Monday by the U.S. Department of Education.
Among people whose student loans came due between October 2008 and September 2009, 8.8 percent have already defaulted on their loans, the government found, up from 7 percent a year ago.
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The increase was most dramatic at for-profit universities, where the default rate jumped from 11.6 percent last year to 15 percent in the latest findings.
“These hard economic times have made it even more difficult for student borrowers to repay their loans,” Education Secretary Arne Duncan said in a press release.
The study looked at more than 3.6 million borrowers from 5,900 colleges and universities. Of them, over 320,000 have already defaulted.
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At some for-profit schools, more than 25 percent of last year’s students have defaulted, and in some cases the default rate tops 40 percent. The education department may decide to bar some of these schools from receiving further student aid. The education department singled out these five schools as having particularly high default rates among former students:
- Tidewater Technical, Norfolk, Va
- Trend Barber College, Houston, Texas
- Missouri School of Barbering & Hairstyling, St. Louis, Mo.
- Sebring Career School, Houston, Texas
- Stanley Technical Institute, Clarksburg, W.Va.
Default rates also increased at public institutions, from 6 percent last year to 7.2 percent in the latest study. Students at private schools fared the best, but still witnessed an increase in default rates, from 4 percent to 4.6 percent.
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Image: arianne, via Flickr.com