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Posted by: Maricopa Lawyers on Sep 15, 2014

The New York Times is reporting that student loan defaults have declined for the first time in several years. The default was first reported by the Education Department, responsible for overseeing the conditions of student loans.

Although student loans have declined, it’s important to note their current level still puts them well above prerecession levels as reported earlier through the Education Department.

Part of the report took a closer look at students who were obligated to begin repayment efforts on federal loans in the 2010-11 fiscal year. Their findings revealed that by last Oct. 1 – a period of nearly three years – 13.7 percent had defaulted. It’s a figure down from 14.7 percent the previous year, yet still 13.4 percent higher than two years previous.

The Education Department examined 21 schools whose default rates were considered so high that they would almost certainly lose eligibility to receive student grants or loans from the federal government – this circumstance is often considered a death sentence for such schools.

Of those schools contained in the latest report, 20 of the 21 are for-profit, nearly all classified as small trade schools, rather than universities. These schools can ultimately appeal upon their loss of funding in the very near future.

The department has since acknowledged that various other schools that have subsequently failed to meet the default standards were no longer placed on their list. A notice was posted earlier on Tuesday which indicated revisions to calculations were made to prevent some schools from losing their federal funding. The notice did not indicate how many schools or which specifically were affected.

Past school compliance ratings relied heavily upon how many students defaulted in under a two year span. This figure rose to 10 percent the previous year, from 6.7 percent in 2009. This two-year measure opens the door for certain tweaking as new graduates are among those counted as deferring repayment on their loans.

Original story provided by the New York Times