Debt up but defaults down

Fewer American students are defaulting on loans despite increased indebtedness.

The student loan default rate fell to 4.5 per cent in 2003, the latest year for which the figure is available, according to the US Government. It peaked at 22.4 per cent in 1990.

Margaret Spellings, the US Education Secretary, credited the hard work of banks, universities and her own department with helping to drive down the student loan default rate.

But critics said the Government was using creative accounting. In 1998, the time before which a borrower is considered in default was increased from six to nine months.

Average debt has doubled since 1994 to about $17,000 (£9,425).