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A sharp drib in the number of college students who stop paying back their loans indicates that recent efforts to assistance students manage their debt are starting to pay off.

The Topic: Federal educatee loan defaultsWhy Information technology Matters: The proportion of students who default has fallen from 13.7 percent to xi.8 per centum.

The U.S. Department of Teaching announced Wednesday that the percentage of Americans who fail to pay their federal pupil loans within three years of leaving college has dropped from xiii.7 pct to eleven.eight percent for the menstruation ending Sept. 30, 2014.

Department officials credited the decrease to the Obama administration'southward various efforts to make college affordable, including a plan that helps borrowers beget monthly loan payments by linking them to their income levels.

The Section data measures those who default on their loans within 3 years of graduating or dropping out of college. (Default is defined every bit going more than than 360 days without making a payment.) The decrease in this "3-yr accomplice default rate" occurred across all sectors in higher pedagogy. For public institutions, the rate decreased from 12.nine percent to 11.7 percent and for private nonprofit institutions, information technology fell from 7.two percent to 6.eight percentage, co-ordinate to the DOE printing release. The default rate as well dropped from 19.1 percent to 15.8 percent for individual for-turn a profit institutions, who remain the sector with the highest default rates.

Related: Spiraling graduate student debt raises warning

The Department uses this 3-year cohort default data to penalize schools with excessively high rates. If an institution'southward default rate exceeds xxx percent for iii sequent years or exceeds xl pct for one yr, it may no longer authorize for sure federal student assistance programs, the main revenue source for many schools. This year, one private non-profit institution, 2 public community colleges and 12 for-turn a profit schools may face penalties, unless they successfully appeal.

Percentage of Americans who fail to pay their federal student loans within three years of leaving college: eleven.8 percent (down from 13.seven percent last year).

Secretary of Pedagogy Arne Duncan said the decrease in defaults is a sign of progress, but the number of students who default on loans is however far too high.

"We know we take a long fashion to go," he said at a printing conference Wednesday, calling on schools, states, loan services and especially Congress to pace up.

"Congress needs to practice an most face, a 180-degree turn," he said. "They need to finish trying to undo the progress we've made, and instead join u.s.a. in our efforts to amend student consequence and accountability in college education."

Some Republicans, like former House Speaker John A. Boehner, have argued that the administration should focus on helping families afford college on the forepart, rather than paying back loans after debt is incurred.

Related: Lack of safeguards driving student debt

An increasing number of students are taking advantage of Obama'southward initiatives and signing upward for income-driven repayment plans, which determine monthly payment amounts in accordance with income level. While these plans take existed for a while, the administration has expanded them and stepped up traditional and social media campaigns to brand sure students know these programs are bachelor. Over the by year, the number of people enrolled in an income-driven plan has increased more than 50 percent, according to Duncan, to more than 3.ix meg.

Some have expressed business concern nearly income-driven repayment plans, because they tin extend the term of a loan to 20 to 25 years, twice as long as the standard plan. This tin can pb to an increase in overall involvement the borrower must pay.

Related: Senator Warren says both parties are correct nigh fixing higher costs

Addressing these concerns, Nether Secretarial assistant Ted Mitchell said at Wednesday'south press conference that income-driven payment plans are merely one tool in the loan repayment toolkit.

"Pay as you earn is non correct for everybody, and that's why we're working with our loan servicers to assistance provide good advice to borrowers," he said. "We exercise empathize that there are borrowers who do need income-driven payment plans either for the long term of the short term. We're very pleased to exist able to brand those available."

Megan McClean, manager of policy and federal relations at the National Clan of Pupil Financial Aid Administrators (NASFAA), said that, overall, income-driven repayment plans are positive.

"Those programs are very important," she said. "They're at that place to protect students from going into default. And that's the most important role about it because default, especially on your federal student loans, can be extremely damaging."

But like other officials, she emphasized that much work remains to be done in making higher affordable.

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Arianna Skibell writes for The Hechinger Study. Before joining Hechinger, she covered health, education, race and criminal/social justice while earning her masters degree at Columbia Journalism School....