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Business and Policy Areas
Business and Policy Areas
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Student Loan Defaults Within Three Years Decrease

October 5, 2015

More students entered loan repayment in FY12 than the year prior, but fewer defaulted on their loans within three years, new data from the Department of Education show.

On September 30, ED released cohort default rate (CDR) information for the 5.1 million federal student loan borrowers who entered repayment between October 1, 2011 and Sept. 30, 2012. Three years later, about 611,000—11.8 percent—had defaulted on their loans. That's a decrease from the FY11 cohort, when 13.7 percent of the approximately 4.7 million new repayers defaulted within the three-year timespan. Borrowers are considered in default if they haven't made a loan payment in 270 days.

Each sector of higher education saw its cohort default rate drop between the FY11 and FY12 groups. The CDR for private nonprofit institutions fell from 7.2 percent to 6.8 percent. Among public institutions, the CDR decreased from 12.9 percent to 11.7 percent. And in the for-profit sector, the CDR dropped from 19.1 percent to 15.8 percent.

Despite the positive trends across the sectors, the data are more dire for a small number of schools. As of 2014, individual institutions with very high three-year CDRs will be subject to sanctions and potential loss of student aid eligibility. Based on the new data, 15 institutions must appeal to ED for continued eligibility, due either to a CDR of more than 30 percent for three years in a row, 40 percent in the most recent year, or both. A full list of the institutions is available on ED's website.

Contact

Anne Gross
Vice President, Regulatory Affairs
202.861.2544
E-mail