Department of Education releases loan default information

UW-River Falls is listed as below the national average for student loan default rates, but its numbers are still steadily rising.

The U.S. Department of Education has recently released the Fiscal Year 2009 (FY2009) national student loan cohort or group default rate, which has increased to 8.8 percent in 2009 from its 2008 rate of 7.0 percent in public institutions. UWRF however has only increased to 2.6 percent in 2009, up .6 percent from its 2008 rate of 2.0 percent.

“We do have a low default rate here at UWRF. I credit both our staff and our student population,” said the UWRF Financial Aid Director Barbara Stinson. “Any rise you see in that is reflective of the new way in calculating it recently.”

According to the FY2009 report it consisted “Of borrowers whose first loan repayments came due between Oct. 1, 2008 and Sept. 30, 2009, and who defaulted before Sept. 30, 2010.” The report went on to say that “Borrowers who defaulted after the two-year period are not counted as defaulters in this data set.”

In a U.S. Department of Education press release the U.S. Secretary of Education Arne Duncan stated, “These hard economic times have made it even more difficult for student borrowers to repay their loans.”

Even though the rate at UWRF hasn’t risen greatly, the Financial Aid office does keep a close eye on these numbers to make sure the students can afford their education. “I do watch it, but I wouldn’t say that I am overly worried about it at this time. That said, we do need to be aware of this and need to educate our students to help them in both planning and managing their debt,” Stinson said.

The U.S. Department of Education press release also explains how the Obama Administration has stepped up to try and take some stress off student loan borrowers. “The Obama Administration has expanded flexible loan repayment options or borrowers through the income-based repayment plan (IBR). This plan makes loan payments more affordable by capping the monthly payment at an amount based on income and family size.

For-Profit schools still rank among the highest on the student loan defaulting chart. According the FY2009 report these schools rose from 11.6 percent to 15 percent. This is 7.8 percent greater than the national public institutions average.

A for-profit school is an institution that is run by a private, profit seeking company or organization. An example of this type of college would be Brown College located in Mendota Heights, which is run by Career Education Corporation.

According to the U.S. Department of Education press release, “Several institutions – notably for-profit schools – have taken action.” It goes on to state some of these institutions “have closed underperforming programs, upgraded their curriculum, begun offering free trial periods so students can try out a program before enrolling, raised admission standards, and boosted repayment rates through better loan counseling.”