Approximately one in five college students default on student loan payments within the first three years of repayment, which shows what a difficult spot graduates are in particularly now. The Department of Labor has reported that overall 6.7 percent of student borrowers default within two years and 11 percent at for-profit schools.

The numbers show that the more money students borrow and the longer they have to pay it off; the more likely they are to default on their loan. For-profit colleges tend to be much more expensive for students although they offer well known and acclaimed programs. Whereas, many non-profit schools like state universities offer cheaper tuition, usually a better name, and a better education.

But, whichever path you take education is necessary and it can help you improve your life; although the less you have to go into debt to earn that education the better. You may be poor while going to school but it’s a lot better than being living it up in college and being poor when you’re a working adult. The ideal is to borrow as little as possible, so you can leave college with the smallest debt.

Because of the growing number of students leaving college with hefty loans and defaulting, the government is going to be collecting and using information to decide which colleges qualify for student loan programs supported by taxpayers. So schools that have over 25 percent defaults for three years will no longer be eligible to get government supported student aid starting in 2012.


Student debt is a growing problem, especially when students default on their payments. Students need to realize that by taking on a lot of debt they are also taking on a lot of stress. Especially in times like this. The recession has made it so that many are unemployed, underemployed, or not making as much as they used too. It’s scary but the reality is that taking on a lot of debt puts you at greater risk for defaulting.

Some well known schools have seen their default rate over three years rise to 23.2 percent at Kaplan University, 17.1 percent at DeVry University, and 15.9 percent at University of Phoenix. Part of the reason though that many of these students are defaulting is because they come from low-income backgrounds and are unable to keep up with repayments.

“In general, higher education is a good investment but there are not guarantees. At some schools, there’s a one in five chance you’ll be in worse financial shape – three years out- than before you began” reported that Michael Dannenberg from the New America Foundation. He also advised students to be cautious when borrowing large amounts of money for college. “The debt can grow exponentially in default, and it follows you forever. College loans can almost never be discharged in bankruptcy.”

There is a lot of risk when taking out a student loan because you never know what is in the future. But with that being said, education is a kind of insurance policy that can help you stay employed, earn more, and secure a better job. But remember to be careful about taking out large amounts of student loans.

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