The student loans in default are raising concerns all over the world
As per the recent survey by the US department of education, it shows that the 2008 was the worst year to graduate from the college when it is the student loans in default as concerned. As per that survey, around 7% of the passed out students had faced the default of student loan. It has been the highest default rate in more than the last decade in total.
The 2008 student loans in default represent a rise in fact from the batch of 2007’s default of student loan which stands at 6.7%. It also jumped from the 35% rate of 2006 that was 5.2%. All the students who have attended the private university in the past have faced the student loans in default at the minimum of 4% while the defaults of student loan from the students who attend the public universities were at 6%.
The highest rate of the default of student loans is seen at the profit schools with a staggering 11.6%. Amongst all the student loans in default, the graduates of the profit based institution represent nearly all of the student loans in default. Under the recent regulations by the federal government, the department of education for the US can manage the funding of federal student financial aid for all the schools that default on the student loans and exceeds the limit of 25% for the three consecutive years or for any school whose graduates have student loans in default at more than 40% a year.
Without the help of the financial aid funds, the school would no longer be able to give its students the federal grants so that it helps in covering the tuition fees for the students. Such schools that do not resolve the default of student loan quickly will stand to lose the ability to offer any kind of federal grants.
One important thing that can lead to more default of student loan at the private colleges is that the lower level of incomes from all the students to earn their bread and butter. As per the statistics from the US department of Education, although only 10% of the total number of students read at the profit colleges, but they receive almost 25% of the federal grants as well as the student loans that are subsidized all at the same time period.
Thus any default of student loans might lead to a lot of complications.
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