More people facing legal action over college loan defaults

Growing numbers of people are failing to pay back their federally-guaranteed student loans, and more of them are being referred to the Justice Department for possible legal action, Marty Roney says at USA Today.

The US Department of Education reported making 5,293 referrals to Justice last year, nearly six times the number in 2006.  An Education Department spokesman said legal action is a “last resort” for collecting delinquent loans.

The default rate for 2008 was about 7% compared with 5.2% in 2006. Rising college costs, in addition to the economy, are helping drive up the rates as people have taken out more loans to cover tuition and fees, the spokesman said.