Word: default
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...Default Rate. In addition, the Government has reinsured student loans of about $4.9 billion guaranteed by 25 states, the District of Columbia and one private nonprofit agency; Washington reimburses the states for 80% of any money they lose paying off defaulted loans. To date, the Government has lost nearly $400 million on the two programs; states have apparently lost almost $47 million more. And the losses are mounting; this year the default rate on student loans guaranteed by Washington is running at a startling...
...course, do not feel obliged to pay for an education they never received, so the Government is left to pay the school or an institution that has bought the loan. "It's a field day for foxes," says Richard Gibbons of the Federal Trade Commission. Last year the default rate on student loans made by privately owned schools was a shocking...
...Many defaults, of course, come about because, at a time of high unemployment, new graduates either cannot find jobs or earn too little to pay off their loans. Still, the default rate obviously indicates lax Government administration of FISL. John J. Walsh, an investigator for the subcommittee, reported to the Senators that he found files on student loans strewn all over some HEW regional offices. HEW officials told the Senators that they have not kept track of the total number of loans outstanding, much less the amount of insured loans at any one school, or whether any particular student borrower...
...belatedly tightening up. It has charged nine schools with violations of loan-program rules, begun testing in California a computerized system of monitoring the status of loans, added 70 new field investigators, and established a staff of eleven people to keep a close eye on lenders who have outrageous default records. In addition, several bills before Congress would forbid students to declare bankruptcy shortly after graduation simply because their student loans exceed their assets. The Nunn subcommittee is expected to recommend prohibiting many schools from making Government-guaranteed student loans, and making it a federal crime for a school...
...efforts come none too soon. Says Howard Feldman, chief counsel of the subcommitee: "Unless we reform the program, conservatives, liberals, everyone is going to take a look at that half-billion-dollar default and say, 'Let's get rid of the whole goddam program!'' That would be a tragedy for needy and well-intentioned students-still the great majority-who fully intend to repay their loans, and for the society that needs their educated skills...