Student lending default management: A guide to improved portfolio performance

April 2012
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Student lending default management: A guide to improved portfolio performance

At a glance

Forecasts predict the federal student loan default rate, reported by the Department of Education, will reach double digits in 2012, with no relief in sight. By understanding the causes of why student lending default continues to rise, default managers can work to insulate themselves against this trend.

Forecasts predict the federal student loan default rate, reported by the Department of Education, will reach double digits in 2012, with no relief in sight. But why are student loan default rates increasing while other consumer debt default rates (i.e., mortgage, auto lending, and credit cards) are declining?

By understanding the causes of why student lending default continues to rise, default managers can work to insulate themselves against this trend. In addition, this trend is likely to lead to further regulation of the student lending market.

This point-of-view will help default managers to assess their operation preparedness for prolonged pressures, not only to highlight operation gaps to be mitigated, but also to identify opportunities and strengths to be leveraged across their operation footprint.