The federal government considers your student loans in default if you missed repayments by 270 days. While it’s your responsibility to pay back your loans, picking a school that can prepare you well enough for your future career can affect your chances of defaulting. And if you’ve already defaulted, there are steps you can take to recover.
15 schools with the highest default rate on federal student loans
Below are the schools that had the highest federal student loan cohort default rate in 2015, according to the most recent numbers from the Department of Education (DoE).
|Champ’s Barber School||57.6%||34|
|Family of Faith Christian University||50%||7|
|Larry’s Barber College||50%||23|
|Tomorrow’s Image Barber & Beauty Academy of Virginia||48.3%||15|
|Cheryl Fell’s School of Business||47%||24|
|Theological University of the Caribbean||45.4%||15|
|Sharp Edgez Barber Institute||45.2%||33|
|United Tribes Technical College||41.7%||56|
|Advance Beauty Techs Academy||40.4%||19|
|Centro De Estudios Universitarios Xochicalco||39.5%||36|
|Nashville Barber and Style Academy||39.4%||15|
|Ambiance Beauty & Barber Academy||38.9%||23|
|Alaska Christian College||38.8%||14|
|The Paul Mitchell School — Roanoke, VA||37.8%||14|
|Rob Roy Academy — New Bedford, MA||37.8%||28|
Source: Department of Education
The DoE’s cohort rate is the number of students who go into repayment on federal loans and default within a year. The rate of default from all graduates — including private student loans — is likely higher across the board.
15 schools with the highest number of defaults on federal student loans
The rate of default doesn’t necessarily mean a lot of students default — only seven students defaulted at the school with the second-highest rate. Below are the schools that had the highest number of defaults in 2015, according to the same DoE data.
|University of Phoenix||17,127||12.3%|
|Altierus Career College — Tampa, FL||7,888||28.4%|
|Ivy Tech Community College of Indiana||5,209||18.9%|
|American Public University System||5,177||23.8%|
|Purdue University Global||5,116||13.7%|
|Ross Medical Education Center — Brighton, MI||3,871||23.1%|
|The Art Institute of Phoenix||3,653||23.2%|
|Platt College — Tulsa, OK||3,391||20.6%|
|Colorado Technical University||3,248||19.6%|
Source: Department of Education
Public vs. private schools: Which has a lower default rate?
Private schools have a lower default rate than public schools overall: 10.3% of public school students defaulted versus 7.1% of private school borrowers.
However, public schools had a lower rate for programs that ran for less than two years. Some 11.7% of public school students in these short programs defaulted versus 22% at private schools.
7 ways to reduce your risk of defaulting on your student loans
If you’re worried about becoming one of these statistics, there are steps you can take to minimize that risk:
- Consider the return on investment. Default rates don’t tell you everything — compare the average salary of recent grads and the employment rate to the cost of a school before you apply.
- Fill out the FAFSA. Not only does federal student aid include grants and work-study in addition to competitive loans, but it’s a requirement for many scholarships as well.
- Apply for scholarships and grants. Your school might offer funding that it doesn’t automatically consider all students for. Talk to the financial aid department to learn what your options are to lower your debt load.
- Research outside funding. Don’t limit yourself to scholarships and grants offered at your school. Government agencies and private organizations also provide funding you can apply for.
- Consider an income-share agreement. This student loan alternative allows you pay a percentage of your income after you graduate and find a job for a fixed number of years instead of tuition. You might pay more than you would if you get a high-paying job, but there’s no risk of defaulting.
- Start repayments in school. Making small repayments toward your student loans while in school can significantly decrease your debt load, especially if you have unsubsidized loans.
- Apply for federal loans first. Private loans typically have significantly less flexible terms and consider your loan to be in default sooner than the DoE.
How to avoid defaulting on a delinquent loan
Lenders consider your loan to be delinquent as soon as you miss that first repayment. It can hurt your credit, but it’s not nearly as bad as a default. There are several steps you might be able to take to avoid defaulting when you’re behind on payments:
- Talk to your servicer. Reach out to the company handling your student loan repayments to explain the situation and find out if you can adjust your term for lower repayments.
- Apply for deferment or forbearance. Got a temporary cashflow problem? Most servicers let you temporarily pause repayments until you’re back on your feet.
- Switch your repayment plan on federal loans. When forbearance doesn’t cut it, switching to an income-based or extended repayment plan can make your loan more affordable in the short term.
- Consider refinancing private loans. Some private lenders are more flexible than others — if yours won’t bend, another might. This option is best if you haven’t missed a repayment yet but might, since that can affect your eligibility.
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How to recover from a defaulted student loan
You have a handful of options when you’ve defaulted on your student loans. Federal loan borrowers can get out of default by signing up for rehabilitation or consolidating with a Direct Consolidation Loan.
With private loans, your choices are limited. You might be able to refinance with another lender by bringing on a cosigner. If not, reach out to your servicer to discuss the situation. They might be willing to offer another repayment plan or settle for an upfront payment of a smaller amount.
A school with a high student loan default rate or high number of defaults should set off some alarm bells about the quality of education it offers. But it’s not the only factor you should consider when applying to school. It’s possible for anyone to default if they don’t fit repayments into their budget.
You can find out more about how student loans work by checking out our guide.
Frequently asked questions
How long does it take to default on a student loan?
It depends on the lender. With federal loans, your loan is in default if you miss a repayment by 270 days. With federal loans, your loan might be in default after 60 to 90 days.
What is a student loan default rate?
A loan default rate is the percentage of borrowers who miss loan repayments for an extended period of time. The most common way to measure default rates is to consider the cohort default rate. This is the number of students who begin repayments and default within one year.
What’s the national student loan default rate?
The national student loan default rate was 10.8% in 2015, according to the most recent numbers from the DoE.