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September 14, 2011 3:26 PM The Highest Student Loan Default Rate

By Daniel Luzer

Yesterday the Department of Education released the latest information about student loan default, the percent of student loan debtors who failed to make payments on their loans.

Guess which state had the highest rate of student loan default rate? It’s Arizona. According to an article by Uriel Garcia in the Tuscon Sentinel:

Arizona had the nation’s highest number of people in default on their federal student loans in fiscal 2009, according to the latest figures from the U.S. Department of Education.
The “cohort default rate” statistics, released Monday, showed that 44,216 of the 276,057 student borrowers credited to Arizona were in default. The 16 percent default rate for the state was almost twice the national rate of 8.8 percent.

Why is this? It’s probably because of the University of Phoenix, the for-profit behemoth with headquarters in Arizona. Although Phoenix students are actually located all around the country, because the institution is located in Arizona the default rates count against Arizona only, no matter where the former students actually live. For-profit colleges have the highest student loan default rates, almost twice the national average.

University of Phoenix officials said the economy that was to blame: “colleges and universities throughout the country saw an increase in default rates, as many working Americans were finding it increasingly difficult to make ends meet,” said Chad Christian, director of public affairs and “issues management” at the Apollo Group, the company that owns the University of Phoenix.

Well right, but that’s what happens. When the economy is bad everyone suffers. Why did Arizona suffer more than other states?

Arizona also had the highest student loan default rate in the country last year.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer