More student borrowers default as increasing tuition, weak economy take toll

By Mark Pitsch
mpitsch@courier-journal.com
The Courier-Journal

As students borrow more money to attend college, more borrowers default on their loans.

That's partly because more borrowers produce more defaulters, said Blake Tanner, deputy executive director of the Kentucky Higher Education Assistance Authority, which administers most of the federal loans that go to students at state colleges and universities.

But the increasing number of defaults also reflects tuition increases that cause some students to leave school, and a weak economy that has left some graduates unemployed or underemployed, Tanner said.

The Kentucky assistance authority said students in Kentucky and Alabama who started repaying their loans in 1999 had a 5 percent default rate within two years. The authority is designated by the federal government to guarantee college loans in those states.

Of those who started repaying in 2001, the latest year for which data are available, 7.4 percent had defaulted. The authority does not have separate default rates for Kentucky students. The authority's default rates compare with national averages of 5.6 percent in 1999 and 5.4 percent in 2001.

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