The current official national standard percentage of student loans in the amount of 7.0 percent, measures the proportion of borrowers who default on their federal education loans in the first two years of repayment. But if the calculation is extended to take into account the default in the first three years of repayment, the proportion of domestic students, loan default jumps to13.8 percent.

New college graduates: the unemployed, debt and defaulting

Under the new rules implemented by the Act on Higher Education Opportunity 2008, the calculation of three years, once the standard percentage of the student loans are used by default. From 2014, colleges and universities whose standard percentage increase of 30 percent will lose access to BAföG – grants and subsidized student loans – for incoming and existing students.

Federal legislation cut the eligibility of a school in federal aid for students in default percentage of school more than 25 percent, but that the directive, the default rate used more tolerant than two years. Officials of the Ministry of Education attributed the rise in defaults of loans to students of the flexible labor market and the number of balloon graduates who are unemployed and with an urgent need for debt relief. » Read more: Student Loan Default Rates on the Rise