October 2, 2000
"This is the lowest default rate in the history of the student loan program, and it has been achieved while tripling the number of loans given every year. By cutting defaults, increasing collections, and making the system more competitive, we have saved taxpayers and students a total of $27 billion. That is very good news for the American people."
President Bill Clinton
October 2, 2000
Today, at the White House, President Clinton announced that the national student loan default rate is 6.9%—the lowest rate ever, and one-third the 22.4% rate that existed when he took office. Lower default rates and better loan collections have saved taxpayers more than $14 billion since 1993, and other student loan reforms have saved taxpayers $4 billion and students $9 billion, for a total of $27 billion in savings since the start of this Administration. The President called on Congress to enact his College Opportunity Tax Cut; expand the GEAR UP program for at-risk youth; and invest in America's education priorities such as school construction and modernization, smaller class sizes, more highly qualified teachers and after-school learning opportunities, and accountability for failing schools.
ANNOUNCING THE LOWEST STUDENT LOAN DEFAULT RATE EVER. President Clinton inherited a student loan default rate of 22.4% – the highest ever. Under this Administration, the rate has declined for 8 consecutive years, and is now at 6.9% – the lowest rate ever. In addition, collections on defaulted loans have quadrupled, from $1 billion in 1993 to $4 billion last year. The decrease in student loan defaults can be credited to:
- A strong economy;
- More scholarship aid and tax credits for college;
- More affordable student loans and flexible repayment plans;
- Efforts to better educate borrowers about their responsibilities; and
- The removal of unscrupulous schools from the program under new authority from Congress.
BUILDING ON EIGHT YEARS OF STUDENT LOAN REFORM. Today's announcement builds on 8 years of efforts to reform the student loan program and create more opportunities for college. Under the Clinton-Gore Administration, students have saved $9 billion: $5 billion through lower interest rates and $4 billion through lower fees. Taxpayers have saved $18 billion: $7 billion by preventing defaults, $7 billion by improved default collections, and $4 billion by making loans through the cheaper Direct Student Loan program. The record includes:
- Creating more affordable loans by reducing student loan fees and interest rates;
- Founding the Direct Student Loan program, which creates healthy competition by giving students and schools an alternative to traditional guaranteed student loans;
- Offering affordable loan refinancing through Direct Consolidation loans; and
- Doubling student aid with programs like the Hope Scholarship tax credit, the Lifetime Learning credit, and Pell Grant scholarships.
CALLING ON CONGRESS TO INVEST IN AMERICA'S EDUCATION PRIORITIES. The President urged Congress to pass a fiscally responsible budget that invests in key education initiatives. The current Republican budget provides:
- $0 guaranteed for urgent school repairs, possibly denying much-needed renovations to up to 5,000 schools;
- $0 in new School Modernization Bonds, preventing the modernization and construction of 6,000 schools;
- $0 guaranteed for class-size reduction, potentially denying smaller classes to 2.9 million children;
- $0 for the College Opportunity Tax Cut to make college more affordable for families; and
- Inadequate funding for after-school programs, improving teacher quality, accountability to help turn around low-performing schools, and the GEAR UP college opportunity program.