Student-Loan Default Rate Hits Record Low
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WASHINGTON — The proportion of students who default on their college loans has dropped below 7% for the first time, the government said last week.
The rate dipped to 6.9% in fiscal 1998, down from 8.8% the year before, according to figures released by the Education Department. Collections on defaulted loans were up, to $4 billion in 1998.
President Clinton said the default rate fell to its lowest level ever, even though more loans were issued. “This is an amazing, amazing thing,” he said.
The rate has dropped each year since a peak of 22.4% in fiscal 1990. Clinton attributed the ongoing decline to an increase in the amount of scholarships, tax credits and other financial assistance available to students; more affordable loans; better flexibility in repayment plans; and efforts to better educate borrowers about their responsibilities.
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