(PRWEB) September 28, 2012
The latest official Cohort Default Rate (CDR), released Friday afternoon, failed to reveal any significant decrease in student loan defaults. Two-year FY 2010 average rates increased slightly to 9.1 percent, up from 8.8 percent for FY 2009. The FY 2010 two-year CDR measures the percentage of students whose first loan repayments came due between Oct. 1, 2009 and Sept. 30, 2010 and who defaulted before Sept. 30, 2011. Three-year (draft) rates, on the other hand, dropped slightly from 13.8 percent in FY 2009 to 13.4 percent in FY 2010. The two-year CDR has been creeping up from the historic low of 4.5 percent for the 2003 cohort. While it’s too soon to tell whether this signifies a leveling off of recent dramatic increases in the CDR, NASFAA is pleased that the rate of increase has slowed.
"As economic recovery limps along and the job market slowly bounces back, it’s no surprise that default rates continue to stagnate or increase," says NASFAA President Justin Draeger. "This unsettling trend is one of the reasons NASFAA convened a Task Force to examine what schools and the federal government can do to help students make wise borrowing decisions and avoid loan default. This task force is working on a series of practical solutions that can be implemented at the federal and institutional level such as authorizing aid administrators to lower loan limits for certain academic programs, moving more struggling borrowers automatically into income based repayment, and strengthening consumer information and financial literacy.
"Although schools cannot control many of the elements that lead to default, we know that colleges can have a positive impact on student loan repayment rates and keeping overall indebtedness down," Draeger said.
NASFAA provides tips to help students be smart consumers.