Student Defaults on Federally-Guaranteed Loans Highest Since 1998
According to new numbers from the U.S. Department of Education, more students are defaulting on their federally guaranteed student loans
Online, September 12, 2010 (Newswire.com) - Student loan default rates are expected to reach their highest levels in almost a decade for fiscal year 2007 at 6.9%. That number is a 2.1% increase over 2005 and the highest since 1998.
In short, more and more students are defaulting on their federally guaranteed student loans.
Perhaps the main reason for the jump in the rate is the sheer number of recent college graduates who are unable to find work. Young people, including recent graduates are finding it increasingly difficult to find jobs in the current economy. The average length of unemployment, at 31 weeks, is at its highest level since the end of the Second World War. As of march, there were a total of 2.3 million unemployed college graduates - 1.45 million more than in March 2007.
Difficult economic times are one of the primary reasons for the flourishing private loan industry - including the payday loan industry.
Most federal student loans qualify for "forbearance" programs - in which payments are temporarily with held but the borrower remains responsible for accrued interest - which is then spread out over the life of the loan. Major lenders, such as Wells Fargo & Co. and Sallie Mae have reported that they are granting more loan forbearances during the recession of the past two years.
Certain need-based borrowers also may qualify for a student loan "deferment," where the government pays the interest payments for a period of time while the student is unable to pay.
IMPORTANT: Student loan deferments and forbearances can each be used only for a maximum of three years for each loan.
Those borrowers who are experiencing trouble repaying their federally backed loans can call their lender or visit www.federalstudentaid.ed.gov. They may also access the web site www.nslds.ed.gov or can contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).
Pre-qualify for payday loans, small business loans or personal loans. Click here to learn more.
