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Federal Loan Default Rates


The Minnesota Office of Higher Education monitors debt trends and evaluates state financial aid policies. In Fiscal Year 2015, Minnesota undergraduates received $1.4 billion from federal student loan programs.

Default Rate Comparisons

Undergraduates attending Minnesota's colleges were less likely to default on federal student loans than their peers nationally, according to information published by the U.S. Department of Education. But Minnesota undergraduates were more likely to borrow than students in other states.

Minnesota's Fiscal Year 2013 three-year default rate was 8.8 percent decreasing from 9.8 percent in Fiscal Year 2012. The number of students defaulting also decreased from 15,744 to 14,062. Minnesota's three-year default rate ranked 41st compared to other states. New Mexico (18.9 percent) had the highest rate and Massachusetts (6.1 percent) had the lowest rate. Nationally, the Fiscal Year 2013 default rate was 11.3 percent, which decreased from 11.8 percent in 2012.

Both in Minnesota and nationally, students attending public two-year colleges were more likely to default than students attending other types of institutions.

Fiscal Year 2013 default rates varied among Minnesota institutions from less than 1 to 27 percent.

Minnesota Students Have a Lower Default Rate at All Types of Institutions Attended than Students Nationally 3-Year Default Rates, FY 2013

Minnesota Students Have a Lower Default Rate at All Types of Institutions Attended than Students Nationally 3-Year Default Rates, FY 2013

Source: U.S. Department of Education

3-Year Official Cohort Default Rates, Minnesota and Surrounding States, FY 2013
State Number of Schools Number of Borrowers in Default Number of Borrowers Entered Repayment Borrower Default Rate
North Dakota2489913,7736.5%
South Dakota232,62321,17012.3%

Calculated August 6, 2016

Source: U.S. Department of Education, Office of Student Financial Aid Programs

About Default Rates

The U.S. Department of Education releases official cohort default rates once per year.

The Higher Education Opportunity Act of 2009 enacted by the U.S. Department of Education published regulations governing the calculation of cohort default rates. An institution's cohort default rate is calculated as the percentage of borrowers in the cohort who default before the end of the second fiscal year following the fiscal year in which the borrowers entered repayment. This extends the length of time in which a student can default from two to three years.

A 3-year cohort default rate is the percentage of a school's borrowers who enter repayment on certain Federal Family Education Loan (FFEL) Program or William D. Ford Federal Direct Loan (Direct Loan) Program loans during a particular federal fiscal year (FY), October 1 to September 30, and default or meet other specified conditions prior to the end of the second following fiscal year.

Colleges and universities with consistently high student loan default rates over a period of three years may be denied participation in federal and state financial aid programs for their students. No institutions in Minnesota have been denied participation in recent years.

Previous Minnesota Student Loan Default Rate Reports

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