As Tamar Lewin reports in today’s Times, defaults on student loans rose again last year, and sharply. Of all borrowers, 8.8 percent – the highest rate since 1997 – were unable to pay their loans, while 15 percent of borrowers at for-profit institutions defaulted on their payments. As Ms. Lewin writes:BECAUSE OF OBAMA, THE TAXPAYERS ARE GONNA BE ON THE HOOK WHEN THESE DEFAULTS SNOWBALL INTO A COLOSSAL AVALANCHE THAT COULD BRING DOWN THE BANKS THAG HOLD THEM (WHO ARE OF COURSE, TOO BOG TO FAIL!).The new rates represent a snapshot in time, covering the 3.6 million borrowers whose first loan payments came due between Oct. 1, 2008, and Sept. 30, 2009, and who defaulted before Sept. 30, 2010. More than 320,000 of those borrowers defaulted during that period.Today’s piece also draws on a new study out from the Institute for Higher Education Policy that illustrates that these figures do not fully communicate the financial hardship student borrowers are facing:[The study] found that for every borrower who defaults, at least two more fall behind in payments. The study found that only 37 percent of borrowers who started repaying their student loans in 2005 were able to pay them back fully and on time.
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