Defaults on federal student loans dipped from a year earlier as more struggling borrowers used programs that let them pay lower amounts based on income and fewer students enrolled at for-profit colleges.
The rate, measured over the first three years that former students are required to make payments for their federal loans, was 11.8 percent, down from 13.7 percent the previous year, according to figures released Wednesday by the Education Department.
Borrowers would have begun paying in the fiscal year 2012. The rate covers borrowers through Sept. 30, 2014, and shows the percent who haven’t made required payments for at least 270 consecutive days. Students who graduated and dropped out of their program are included. The number of borrowers who defaulted decreased 6 percent to 611,000 among the 6,100 schools attended in the U.S.
The amount of federal education debt taken out by students and their parents, almost $1.2 trillion, has doubled since 2007. Almost 3.9 million former students signed up for income-based repayment plans as of June 30, a 56 percent increase from a year earlier.
As more people use the programs, which offer forgiveness after at least 20 years, the cost to taxpayers is expected to grow. The Congressional Budget Office estimated it’s an additional $39 billion for loans granted in 2015 and over the next decade.
Other student loan data doesn’t match this year’s declining federal default rate. Last month, the Federal Reserve Bank of New York said about 11.5 percent of student debt was delinquent or in default for at least 90 days in the quarter that ended June 30, up from 11.1 percent in the previous three months. The data, for private and government loans, comes from credit reports.
The three-year rate decreased from last year’s rates for all sectors. The rate for public colleges was 11.7 percent, down from 12.9 percent. Former students from nonprofit schools defaulted at a rate of 6.8 percent, down from 7.2 percent. At for-profit college students, where rates have been highest, defaults were 15.8 percent, down from 19.1 percent.