Guaranteed Student Loan Program Bankruptcies

Under the Guaranteed Student Loan program, loans are made to students by participating private lenders. These loans are insured by the U.S. Office of Education or by State or private nonprofit guarantee agencies which have reinsurance agreements with the Office. The Federal Government pays 100% of lender losses on default and bankruptcy claims on Office of Education insured loans, and reimburses State or nonprofit agencies for 80% of their payments to lenders. A random sample of 606 bankruptcy claims paid during the period July 1, 1975, through June 30, 1976, was studied.