WASHINGTON -- The rate of borrowers defaulting on their school loans fell to 17.5% in fiscal year 1991 from 22.4% the previous year, the U.S. Department of Education said.

Assistant Education Secretary David Longanecker said the drop, to the lowest level since fiscal 1988, reflected improvements in program management and accountability.

"We believe this is probably due to the default initiative Congress took three to four years ago," he said at news conference.

Schools Dropped from Program

Congress in 1989 required the Department of Education to cut out of the federal guaranteed loan program schools where 30% or more of students defaulted in the prior three years.

In 1989, 138 schools were cut off, followed by 80 in 1990. School default levels are now being calculated for 1991, the latest period for which data are available. That fiscal year ended Sept. 30, 1991.

Mr. Longanecker said the lower default rate is evidence that the government can administer a student loan program efficiently. Opponents of a current legislative proposal calling for direct student lending by the government have contended that the private sector would be more efficient.

The education department also reported that the taxpayer costs of loan defaults are declining. The Office of Management and Budget estimates it will pay out $2.5 billion to cover unpaid loans this fiscal year, down from $2.7 billion in 1992 and $3.6 billion in 1991.

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