By Janet Lorin & John Hechinger
Bloomberg News - Sep 30, 2013
About one in seven borrowers
defaulted on their federal student loans, showing how former
students are buckling under higher-education costs in a weak
economy.
The default rate, for the first three years that students
are required to make payments, was 14.7 percent, up from 13.4
percent the year before, the U.S. Education Department said
today. Based on a related measure, defaults are at the highest
level since 1995.
The fresh data follows the announcement by Barack Obama’s
administration that it would seek to restrain skyrocketing
college expenses by tying federal financial aid to a new
government rating of costs and educational outcomes. The rising
number of defaults shows the pain of borrowers, said Rory
O’Sullivan, policy and research director at Young Invincibles, a
Washington nonprofit group.
“Our generation is behind in the economic recovery and not
recovering as fast as we need to,” said O’Sullivan, whose group
represents the interests of people ages 18 to 34. “It’s
financial disaster for borrowers. Defaults can dramatically
affect their credit rating and make it harder to borrow in the
future.”
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