Policy Analysis | November 2009
What are the student loan default rates in the SLC states?
The FY 2007 national student loan default rate increased to 6.7 percent, up from the FY 2006 rate of 5.2 percent. As a historical comparison, in FY 1990, nearly one in four borrowers defaulted on their federal loans when default rates set an all-time high of 22.4 percent. The rate dropped to record low of 4.5 percent in FY 2003. Schools with excessive default rates may lose eligibility from one or more federal student aid programs.
Half of the ten states with the highest default rates are in the South--Texas (9.3%), West Virginia (9.3%), Arkansas (9.0%), Kentucky (8.8%), Mississippi (8.8%), Colorado (8.6%), Louisiana (8.6%).Six Southern states – Maryland (6.3%), Georgia (6.3%), Missouri (6.0%), North Carolina (5.7%), South Carolina (5.4%), Virginia (5.3%) – had default rates below the national average.The table below provides default rates for SLC member states.
Student Loan Default Rates in the Southern States
|State||Number of Eligible Schools with Loans||Number of Borrowers in Default||Number of Borrowers Entered Repayment||Borrower Default Rate|
Source: United States Department of Education Federal Student Aid Program, October 2009 (accessed November 2, 2009)