The findings illustrate the challenges that recent graduates have faced of entering the workforce as the economy has slowed. For a growing number of students in the recession, diplomas have come with financial difficulties.
Of the students whose first loan payments came due Oct. 1, 2007, 7% defaulted before Sept. 30, 2009, the Education Department says. The default rate jumped from 6.7% a year earlier and from 4.6% three years earlier, according the report.
"Many students are struggling to pay back their student loans during very difficult economic times," U.S. Secretary of Education Arne Duncan said in a statement. "Far too many for-profit schools are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use."
Students who attended for-profit schools operating two- and three-year programs were about three times as likely to default on their loans as students at four-year public universities, according to the report. For-profit students represented only 25% of all student borrowers, but 43% of the defaulters, the Education Department says.