University student loan default rate lowest among Illinois public universities
The University has the lowest student loan default rate among public universities in Illinois, according to recently released figures from the U.S. Department of Education.
University administrators credit the 2.5 percent rate to good communication between students and their lenders and increased employment of graduates.
The three-year rate represents the percentage of students who default, or are unable to repay their loans, within three years of graduation or withdrawing from school. The University’s figures are much lower than the state’s average rate of 14.4 percent for all schools and the lowest out of the 12 public universities listed on the U.S. Board of Higher Education’s website.
According to the U.S. Department of Education results, 5,009 students went into repayment and 127 of them defaulted on their loans between Oct. 1, 2008 and Sept. 30, 2009, the federal fiscal year.
“I think (students are) getting a good education, getting jobs ... and they are able to make repayments,” said Dan Mann, director of the Office of Student Financial Aid. “We also do a good job trying to communicate with students about the process and trying to make sure they understand.”
Susan Curtis, lecturer in Business, who teaches about loans in her Accounting and Accountancy I class, said that as a result of the poor economy, students may not be able to pay back their loans on time, falling into default. However, she said she believes one of the reasons the University’s default rate is so low is that there are many colleges that produce successful students.
“We know that we have very strong professional schools,” Curtis said. “We have the business school, we have the engineering school, and we know that out of those colleges, our students are working.”
As a large percentage of University students graduate from these schools with jobs, she said they are the ones most likely paying back their loans and contributing to the low default rate.
In addition to a high employment rate of University graduates, Mann said the Student Office of Financial Aid follows default rates very closely and works hard to make sure students are informed about their loans and communicating with their lenders from the start.
He said there are resources available for students who take out loans online as well as at the financial aid office.
“Students can clearly first and foremost utilize the online tools,” Mann said. “But if they have any questions, they should contact us. We have financial aid advisers that can help them understand the process and... After they leave school, if they have concerns about their repayment process, they can contact us, and we can help direct them to the right place.”
Curtis reiterated the importance of staying informed about the specifics of student loans. She said she worked hard to be a “wise consumer” when she was paying off her student debt, looking into what her monthly payments would be, her interest rates and how much the monthly payment would increase over time.
Mann said defaulting on a student loan can affect a student’s lending opportunities in the future.
“Once you go into default, that goes on your credit record, and it can really impede your ability to take out a loan for a car or a home mortgage,” Mann said. “It really does have financial consequences.”
Although student borrowing can sometimes carry a negative stigma, Mann said he wants students to know that borrowing is “not necessarily a bad thing,” and that thousands of students nationally are able to repay their loans on time.
In the 2010-11 school year, 14,073 undergraduates and 3,674 graduate students took out a direct loan, he said.
“(Borrowing) is kind of an investment in your future, and if you try to manage your debt, it can obviously help you,” Mann said.
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