At 10.9 percent, Arizona has a higher rate of federal-student-loan defaults than any other state in the nation, the government said Monday.

The U.S. Education Department released data that show how many borrowers defaulted within two years after their first repayments came due between Oct. 1, 2007, and Sept. 30, 2008.

In that time, 24,531 borrowers defaulted. They attended 90 colleges in Arizona.

The national default rate for the same time period is 7 percent, Education Secretary Arne Duncan announced on Monday.

"This data confirms what we already know: that many students are struggling to pay back their student loans during very difficult economic times," he said in a news release. "That's why the administration has expanded programs like income-based repayment and Pell Grants to help students in financial need."

For-profit colleges have lots of defaults

Students attending for-profit schools are the most likely to default, Duncan said.

Arizona's default rate could be so high because the University of Phoenix is based here, Education Department spokeswoman Jane Glickman said. Of all the borrowers in default in Arizona, 70 percent went to that university, she said. Of all the repayers, 60 percent went there.

Students who earn an associate's degree at a for-profit college carried a median federal-student-loan debt of $14,000, while the majority of students at community colleges do not borrow, Duncan said.

In Arizona, nine of 10 of the colleges with the highest default rates are private schools. One is a public community college.

Arizona's public universities have some of the lowest default rates in the state.

University of Arizona students' default rate is 4 percent.

Tucson College plans to improve high rate

Tucson College had the highest default rate in the state, at 34.6 percent.

Schools with default rates of 25 percent or greater for three consecutive years face loss of eligibility in the federal student-aid programs.

Tucson College could be at risk, because the school's rate was 26.3 for 2007.

However, it has been working on a default-rate improvement plan with its accrediting agency for about a year, said campus director Jim Geymont.

The school has improved its annual default rate to 19.5 percent, he said.

Part of the plan involves training the staff to help students understand their financial-aid options and obligations, and counseling students who might default, he said.

"We expect to continue to see positive results from our well-rounded approach and are working hard to ensure that this very positive trend continues," Geymont said.

The Arizona State Board for Private Postsecondary Education also monitors schools that have problematic default rates.

Also at risk is Lamson College in Tempe, which had the second-highest default rate in Arizona. The 2008 rate is 30.4 percent, and the 2007 rate is 26.6 percent.

Student-loan default rates change with the economy and with students' financial well-being, so high default rates shouldn't be used to judge the quality of a college, Harris Miller, president of the Washington, D.C.-based Career College Association, said in a news release.

What to do if you can't repay

The problem of increasing defaults on federal student loans started before the economy turned downward, said Catherine Williams, vice president of financial literacy at Money Management Internation-al, a credit-counseling agency based in Houston. More students were taking out larger loans, partly because they could and not always because it was the best choice, she said.

Additionally, college costs more, and more students are taking five years to get through a four-year program, Williams said.

Now, graduates are struggling to find jobs and can't repay their loans, she said.

What to do?

"Student loans will not go away," Williams said.

They won't be excused, even in bankruptcy, she said, so borrowers must call their lenders early on and explain their situations to take advantage of lenders' repayment options.

Contact reporter Becky Pallack at or 807-8012.

Source: U.S. Department of Education

Note: Some rates are based on a small number of loans and defaults; one student's default out of four total loans, for example.

Figures are for 2008, the most recent year for which statistics are available.

Link: national database