The Wall Street Journal reports that the U.S. Department of Education probably isn’t sweating student loan defaults much, considering it will probably recover about 85% of the money — much better than the 10% recovery rate for overdue credit cards. That means:
The strong loan return rates may prove awkward for the federal government, which is instituting regulations on for-profit colleges. The government is arguing the schools’ graduates cost taxpayers too much money because they learn little in class and ultimately default on loans at high rates.
Still, Sen. Tom Harkin (D., Iowa), chairman of the Senate committee looking into for-profits, said in the Journal it’s not enough that the government recoups most of its money:
“Default should not be considered success, for either taxpayers or students who end up in debt.”