Government Sees High Returns on Defaulted Student Loans

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After paying the companies that actually collect the loans and other costs, the U.S. Department of Education expects to recover 85 percent of defaulted federal loan dollars based on current value, the Wall Street Journal reported today. According to White House budget figures for fiscal 2011 ending in September, the federal government expects gross recovery of between $1.10 and $1.22 for every dollar of defaulted student loans. An estimated $49.9 billion of Federal Family Education Loan and Federal Direct Lending Program loans are in default, out of a total $713.4 billion outstanding, as of Sept. 30. Those amounts include only principal balances, not interest.