Some good news about student loan defaults
January 03, 2019
There is good news and bad news when it comes to student loan defaults.
The good news: the amount of student loans going into default slowed down in the federal fiscal year ending September 30. The bad news: the cumulative defaulted loan portfolio continues to grow.
According to a December 20 Electronic Announcement, the Department of Education reported that about 247,000 borrowers - or about 1.3 percent of borrowers in repayment - entered default during the last quarter of FY2018. The outstanding loan balances of new defaulters totaled approximately $5.8 billion or 0.9 percent of the total outstanding dollars that were in repayment last quarter. This is a decrease compared to both the percentage of recipients and dollars that went into default at the same time one year ago.
The Announcement from ED indicated that because there are no provisions to write off defaulted federal student loans, the cumulative defaulted loan amount continues to grow even as delinquencies and new defaults have slowed.
Higher education leaders in general and financial aid office professionals in particular can celebrate the news that defaults and delinquencies are slowing. It is perhaps an indicator that some of the financial education and default prevention strategies are working.
For assistance on default prevention strategies, contact Mapping Your Future at firstname.lastname@example.org or 1-800-374-4072.