Student loan defaults far exceed U.S. rate

The default rate on student-loan debt nationally has exceeded 10%, recently analyzed federal data shows. Of the 4.5 million borrowers paying back student loans, 458,687 are a full year in arrears.

The news was better in Idaho: Student loan borrowers in the Gem State had an 8.6% default rate, right there with New York, at 8.6%, and California, where 8.8% of borrowers are behind.

Idaho has 33 schools eligible to participate in federal loan programs.

Massachusetts had the lowest default rate, at 5.8%; Nevada — which has the same number of eligible schools as Idaho — had the highest, at 18.2%, or nearly one borrower in five.

Private schools had the lowest default rate, at 6.6% overall. Public schools saw a 9.6% default rate. The highest rate of default was at for-profit colleges, where 15.2% of borrowers are in arrears. The overall default rate was 10.1%, according to LendEdu, which based its analysis on the most recent federal student-loan data.

One Idaho school, The Cosmetology School of Art and Science in Burley, is in danger of losing its eligibility for federal student-loan assistance. It has reported a default rate exceeding 30% for three years in a row. Barber and cosmetology schools fared poorly in the rankings.

The overall U.S. loan default rate in the second quarter, according to the most recent data from the Federal Reserve, was 1.68%. The default rate on credit cards, which, like student loans, is unsecured, was 2.56%, or about one-quarter of the national default rate on student loans.

The problem is expected to grow worse: The Brookings Institute estimates 40% of student loan borrowers are at risk of default by 2023.

As of June 2018, Forbes pegged total U.S. student debt at $1.52 trillion. The average student debt, it found, was $38,390, which would necessitate a roughly $450 payment on a 10-year schedule at prevailing interest rates.

The median student debt is between $10,000 and $25,000. About 2% of student-loan borrowers owe $100,000 or more.