High unemployment is now affecting student loan default rates. According to a study released Monday by the Department of Education, the number of borrowers defaulting on federal student loans has jumped to 8.8 percent, up 1 percent from 2008.
Borrowers who attended for-profit colleges accounted for a large portion of defaults, but sharp increases in defaults were also noted in the public and non-profit sectors. The default rate increased from 6 percent to 7.2 percent among public school attendees and from 4 percent to 4.6 percent among students at private not-for-profit colleges.
Overall, 3.6 million borrowers entered repayment in fiscal 2009; more than 320,000 had already defaulted last fall, an increase of 80,000 over the previous year. college tuition costs, low graduation rates and poor job prospects are getting more and more students over their heads in debt.