Tip of the Week

It’s not just a financial aid office issue.

While higher education institutions are dealing with recruitment, enrollment and retention on the front end, student loan default is sneaking up on the back end.

The FY 2023 default rates were just released last week and remain low due, in large part, to the payment pause during the pandemic. However, in announcing the release of the default rate, the Department asked schools to use caution.

Rather than using default rates as a measure of how well their school is doing, the Department encourages schools to look at the nonrepayment rates. 

According to the Department, the newly released nonrepayment rate data shows that approximately 1,800 institutions have nonrepayment rates at or exceeding 25 percent. The nonrepayment rate is a percentage of those borrowers on an institutional basis who entered repayment between January 2020 and May 2025 and whose federal student loans were more than 90 days delinquent. 

And while financial aid offices are dealing with implementation of new federal regulations, they will likely be the ones in most institutions dealing with the default issue.

In its announcement of the default rate, the Department outlined several steps for institutions to take to address high nonrepayment rates.

But for this issue of student loan default – or nonrepayment – is to be solved, it isn’t a problem just for the financial aid office. The consequences of high student loan default impact all the institution – especially if it risks Title IV eligibility.

And because the problem impacts all the institution, the solution will likely only come from taking an institution-wide approach.

– By Catherine Mueller