Default Rate on Student Loans Reaches Record Low

The default rate on government student loans has dropped to the lowest level since Washington began keeping track more than a decade ago.

The rate dipped to 8.8% in fiscal 1997, from 9.6% in 1996, according to figures released last week.

U.S. Education Secretary Richard Riley credited responsible student borrowers, schools, underwriters and lenders, a crackdown on debtors, and the robust economy with its plentiful jobs.

The rate has dropped each year since a peak of 22.4% in fiscal 1990.

Student loans underwritten by the federal government averaged $4,103 in fiscal 1997. The loans went to 2.15 million students attending more than 7,000 vocational schools, college and universities. Of those students, about 189,000 defaulted by falling behind in their payments.

The figures represent borrowers whose first payment was due in fiscal 1997 and who failed to make a payment before Oct. 1, 1998, the end of fiscal 1998.

Individual school default rates can be found on the Internet at https://www.ed.gov/PressReleases/10-1999/defaultrate.html.