Federal Student Loan Two-Year Cohort Default Rates over Time

By September 30, 2011, 9.1% of borrowers who entered repayment in 2009-10 defaulted on their federal student loans. This was the highest cohort default rate since 1996, but the default rates were 21% and 22% in 1989 and 1990, respectively.

Figure 9A: Federal Student Loan Two-Year Cohort Default Rate (CDR), 1987–2010
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Federal Student Loan Two-Year Cohort Default Rates over Time

Two-year cohort default rates are based on the percentage of borrowers entering repayment in a fiscal year who default by the end of the next fiscal year. For example, the FY 2010 two-year cohort default rate, based on students who entered repayment between Oct. 1, 2009 and Sept. 30, 2010, counts those who defaulted before Sept. 30, 2011. About 4.1 million borrowers entered repayment in 2009-10 and 375,000 defaulted by the end of FY 2011. Three-year rates include borrowers who default by the end of the second fiscal year following the fiscal year in which they enter repayment.

Notes & Sources 

SOURCE: U.S. Department of Education, www2.ed.gov/offices/OSFAP/defaultmanagement/defaultrates.html.

Key Points
  • By September 30, 2011, 9.1% of borrowers who entered repayment in 2009-10 defaulted on their federal student loans. This was the highest cohort default rate since 1996, but the default rates were 21% and 22% in 1989 and 1990, respectively.
Also Important
  • Students who leave school without completing a degree or certificate are significantly more likely than those who complete their programs to default on student loans. (See, e.g., Deanne Loonin, The Student Loan Default Trap: Why Borrowers Default and What Can Be Done, National Consumer Law Center, July 2012)
  • The federal government eventually collects over 90% of the student loan dollars that have gone into default. After adjusting for the time and cost involved in collecting these funds, however, the total cost of default is expected to be about $38 billion for loans issued in 2012-13. (New America Foundation)