Loan Study on Students Goes Beyond Default Rates

New York Times
By TAMAR LEWIN
Published: March 15, 2011

For each student who defaults on a loan, at least two more fall behind in payments on their student debt, a new study has found.

The Institute for Higher Education Policy, a nonprofit organization, said in a report that two out of five student loan borrowers were delinquent at some point in the first five years after they started repaying their loans.

Almost a quarter of the borrowers used an option to postpone payments to avoid delinquency.

The institute said the goal of its study was to develop a fuller picture of the debt burden that students face by compiling data on students who have trouble repaying their loans, but do not default.

“We want to get beyond the dichotomy of people who default on their loans and everyone else,” Alisa Cunningham, the institute’s vice president for research and programs, said on Tuesday.

The study, based on data from five of the nation’s largest student-loan agencies, found that only 37 percent of student borrowers who started repaying their loans in 2005 were able to fully pay them back on time.

And that percentage is probably decreasing, given the high unemployment rate of recent years, Ms. Cunningham said.

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