U.S. Secretary of Education Margaret Spellings today announced the FY 2006 national student loan cohort default rate remains historically low at 5.2 percent.

"Federal student aid remains one of the best options for financing education after high school," said Secretary Spellings. "Federal student loans generally offer lower interest rates and more flexible repayment options than other loan options and help to make higher education more affordable for many students. The Department offers students and families a variety of counseling resources and works diligently to assist borrowers in understanding their loan options and obligations."

The rate increased from 4.6 percent in FY 2005 and from 5.1 percent in FY 2004. Gulf states affected by Hurricanes Katrina and Rita saw large percentage increases in their default rates, contributing, in part, to the national jump.

As a historical comparison, in FY 1989, nearly one in four borrowers defaulted on their federal loans when default rates set an all-time high of 22.4 percent. The rate dropped to a record low of 4.5 percent in FY 2003.

Information on the national student loan default rate, as well as rates for individual schools, states, types of postsecondary institutions, and other sectors of the federal loan industry are available at http://www.ifap.ed.gov/DefaultManagement/
DefaultManagement.html.

Borrowers needing assistance in repaying their student loans can visit www.federalstudentaid.ed.gov or contact the holders of their loans to learn about repayment options. For help locating their loan holders, borrowers may access www.nslds.ed.gov or contact the Department's Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).

NOTE TO EDITORS: The FY 2006 default rates represent the percentage of borrowers in the Federal Family Education Loan and William D. Ford Federal Direct Loan programs who began loan repayments between Oct. 1, 2005, and Sept. 30, 2006, and who defaulted before Sept. 30, 2007.

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