The share of people not making payments on their federal student loans within three years of them coming due has fallen, the Department of Education reported Wednesday.
The national student loan default rate, 11.8 percent a year ago, stands at 11.3 percent. It is one of the most closely watched metrics in higher education because schools with default rates of 30 percent or more run the risk of losing access to federal student aid.
The latest default numbers represent the percentage of borrowers who began the repayment process Oct. 1, 2012, and fell at least nine months behind by Sept. 20, 2015. In October 2012, more than 5.2 million people from 6,155 schools began paying down their student debt. Of those, 593,182 defaulted.
Public colleges, which educate a majority of students, recorded an 11.3 percent default rate, down from 11.7 percent a year earlier. At private nonprofit colleges, the default rate edged higher from 6.8 percent to 7 percent. For-profit colleges, which historically have had some of the highest levels of defaults, posted a 15 percent rate, down from 15.8 percent.
“Even with progress, we know considerable work remains ahead,” Education Secretary John B. King Jr. said in a statement.
King credits increased enrollment in the government’s generous repayment plans with lowering the national default rate. The Obama administration has given Americans more options for repaying their student debt, expanding plans that cap their monthly payments to a percentage of their earnings to help them avoid defaults. Use of those income-driven plans has gone up 140 percent since December 2013, with 4.6 million borrowers enrolled as of December.
The so-called cohort default rate captures whether students are severely behind on their loans but not whether they are struggling to make payments. About 3.6 million people with federal student loans are in some stage of delinquency, according to the government.
What’s more, the latest cohort numbers represent just a sliver of total defaults on federal student loans. About 8.1 million people had not made a payment on $128 billion in student loans for at least nine months as of June, an 8 percent increase over the same period a year earlier, according to the government.
Most of those people have loans from the old bank-based federal lending program. Also, the share of people defaulting for the first time has declined as a percentage of borrowers in repayment, which is the total universe of people repaying their loans, inched up in the last quarter. Still, the number of borrowers with newer loans who were falling behind on payments is high, and tens of thousands of people are defaulting for at least the second time.
Higher education experts also worry that schools can game cohort default rates by encouraging students suffering financial hardship to postpone payments through deferment or forbearance. The Education Department has previously said the default rate is susceptible to “gaming behavior” by schools.
On Wednesday, the education agency said 10 schools, nine of them run for profit, face sanctions for having default rates of at least 30 percent for three consecutive years, or a rate higher than 40 percent for one year. The colleges, most of which are cosmetology or barber schools, must all appeal to the department if they want students to be able to take out federal loans and receive federal grants.
Aaron’s Academy of Beauty in Waldorf is the only Washington-area school under threat of losing access to the federal student aid program. Meanwhile, the latest cohort default rate at the University of Maryland remained the same as the previous year at 2 percent. The rate crept up at Prince George’s Community College from 14.5 percent to 14.8 percent, while it fell from 9.9 percent to 9.5 percent at Montgomery College.
In the District, defaults at the University of the District of Columbia grew from 12.6 percent to 15.6 percent. The rates among private nonprofit schools in the city were: American University, 1.4 percent (down from 2.1); Catholic University, 2.5 percent (up from 1.8); Gallaudet University, 8.8 percent (up from 5.3); George Washington University, 1.3 percent (up from 1.2); Georgetown University, 0.8 percent (up from 0.6); Howard University, 6 percent (down from 7.8); and Trinity College, 9.1 percent (down from 10.4).
In Virginia, the default rate at the University of Virginia, was 0.9 percent (down from 1.7). At George Mason University, it was 2.1 percent (up from 1.6).
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