Student Loan Default Rates Hit Highest Levels Since 1998

Default rates on student loans are skyrocketing the WSJ reports, citing new numbers from the U.S. Department of Education.

From The WSJ: Default rates for federally guaranteed student loans are expected to reach 6.9% for fiscal year 2007. That’s up from 4.6% two years earlier and would be the highest rate since 1998.

In 2008, SLM Corp. also known as Sallie Mae, wrote off 3.4% of its private loans that were already considered troubled….more than double the figure in 2006. Student Loan Corp., a unit of Citigroup Inc., wrote off 2.3% of those loans in 2008, compared with 1.5% a year earlier.

“The volume of people in trouble is definitely increasing,” says Deanne Loonin, a staff attorney at the Boston-based National Consumer Law Center…

Lenders say they are hearing more pleas for help as the unemployment rate worsens and debt levels soar among graduates.

Students borrowed $19 billion in private loans in the 2007-2008 school year, six times the amount they borrowed a decade earlier, after factoring in inflation, according to the College Board, a New York-based nonprofit.

A combination of increased amount of financing with the omnipresent availability of student loans in general, is certainly the main catalyst to the cost of U.S. college that needless to say is out of control.

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