The U.S. Department of Education announced Monday that the percentage of students who defaulted on their loans has decreased nationally for the 2005 fiscal year.
The national default rate was announced at 4.6 percent, down from 5.1 percent the year before. The 2004 fiscal year is the first time in 13 years that the default rate rose, which caused analysts to predict increased rates in the future.
Officials have credited the decline to a large number of students who consolidated their loans to keep current interest rates before the rates rose on July 1, 2005, as reported by Inside Higher Ed Tuesday.
Another factor that contributed to the decline was the repayment relief the federal government gave to college students affected by Hurricanes Katrina and Rita. The government gave students six months forbearance on their loans, or, if they qualified for economic hardship or loss, deferments.
At the University of Missouri, the default rate actually rose from 2 percent to 2.4 percent in the 2005 fiscal year. The state of Missouri’s default rate, which includes statistics from 162 universities, is 3.8 percent.
Default rates peaked nationally at 22.4 percent in 1992 and have fallen consistently since then.