For Immediate Release
US PIRG Decries Increasing Student Loan Default Rates
Student Loans Made Through Banks Cause Students to Default
WASHINGTON - The U.S. Department of Education released the 2007- 2008 default
rates on student loans this Monday. The rates have increased from 5.2% in 2006 to 6.7% in 2008,
showing that borrowers are increasingly defaulting on their monthly repayment
Students who borrowed through the FFEL (Federal Family Education Loan) program
defaulted at higher rates than those who borrowed through the DL (Direct Loan)
program. Pending legislation in the US House of Representatives, HR
3221 - the Student Aid and Fiscal Responsibility Act, would eliminate the
entitlement banks receive through the FFEL student loan program and direct that
money toward students in the form of grant aid.
“The new U.S. Department of Education statistics on rising FFEL default
rates reinforce what we have always known, that banks and lenders receive
excessive profit made off the backs of student borrowers,” Rich
Williams, the U.S. PIRG Higher Education associate said. “I
call on Congress to cut excessive lender subsidies and to pass HR 3221.”
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U.S. PIRG, the federation of state Public Interest Research Groups (PIRGs), stands up to powerful special interests on behalf of the American public, working to win concrete results for our health and our well-being. With a strong network of researchers, advocates, organizers and students in state capitols across the country, we take on the special interests on issues, such as product safety,political corruption, prescription drugs and voting rights,where these interests stand in the way of reform and progress.