A government crackdown on defaulted student loans is succeeding: The delinquency rate is going down, says the Department of Education.
Agency officials said Monday the default rate on Federal Family Education Loans, formerly called Guaranteed Student Loans, dropped from 22.4 percent in the 1990 fiscal year to 17.5 percent in 1991, the latest year for which figures are available.The department figures the default rate for a particular year by calculating the number of borrowers scheduled to begin making loan payments in that year who defaulted either in that year or the following year.
Education officials also estimated that taxpayers will spend about $1 billion less this year than in 1991 on bad loans, with the total dropping to about $2.5 billion from $3.6 billion.
"Many of the schools are doing a very effective job of bringing their default rates down," said David Longanecker, assistant secretary of education for postsecondary education.
Every type of school eligible to participate in the loan program saw default rates decline. Profit-making career schools continued to have the highest average default rate, 35.9 percent, down from 41.2 percent. Students using loans to attend foreign institutions had the lowest - 4.5 percent, down from 9.8 percent.
Private four-year schools had a rate of 5.7 percent, down from 6.5 percent and public four-year schools had a rate of 6.5 percent, down from 7.0 percent. The rate was 14.7 percent for public two-year schools, down from 17.2 percent, and 15.5 for private two-year schools, down from 18.5 percent.
The Department of Education said no state-by-state list or list of schools was available yet.