Sept. 25, 2019 – The latest national cohort default rates (CDRs) for federal student loans, released publicly Wednesday morning, suggest that the growth in student loan defaults is slowing, with CDRs decreasing across all sectors.
According to the new data from the Department of Education, the CDRs declined for the second year in a row. The federal default rate captured measures the percentage of borrowers who entered repayment between Oct. 1, 2015 and Sept. 30, 2016, and defaulted on their loans before Sept. 30, 2018. The annual data show the national three-year default rate dropped from 10.8% for loans that entered repayment in fiscal year 2015 to 10.1% for loans that entered repayment in fiscal year 2016, a decrease of 6.5%.
"NASFAA is encouraged to see that for the second year in a row we’re trending in the right direction,” said National Association of Student Financial Aid Administrators President Justin Draeger. "Although schools cannot control many of the elements that lead to default, colleges can have a positive impact on student loan repayment rates and keeping overall indebtedness down. As we inch closer to the next reauthorization of the Higher Education Act, we’re hopeful that we can make some meaningful reforms to student loan repayment that will help students to make timely payments and avoid default. NASFAA has recommended consolidating and simplifying the current federal loan repayment plans, solidifying Public Service Loan Forgiveness, exempting all loan forgiveness from the calculation of gross income for income tax purposes, and continuing forward with the Department of Education's steps on improving federal loan servicing. We look forward to working with our federal colleagues and lawmakers to implement these commonsense changes.”
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The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents more than 28,000 financial aid professionals at nearly 3,000 colleges, universities, and career schools across the country. NASFAA member institutions serve nine out of every ten undergraduates in the United States. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit www.nasfaa.org.
Publication Date: 9/25/2019