Paying it back

Recent data reveals college loan default rates have increased in current years; however, campus sees rates decrease

While other college campuses lose their accreditation and students nationwide drown in debt, Georgia College’s student loan default rates decrease.

The results from fiscal year 2009, released by the U.S. Department of Education, find GC’s default rate at 3.9 percent, dropping almost an entire percentage from the previous year’s 4.7 percent.

“For us to have a whole percentage decrease, that says a lot about Georgia College,” said Director of Financial Aid Cathy Crawley.

Nationwide data places public schools collectively with an increased default rate of 7.2 percent, which is drastically up from fiscal year 2008 6 percent.

This year marks the highest rates have been since 1997 8.8 percent, and with rates peaking at 20 percent in 1990.

But, simply because GC’s default rate has decreased, it does not mean students are debt-free, or approaching it.

Every semester students applying for graduation are asked to attend exit counseling loan sessions. Specifically designed to aid students in their plight to repay their loans.

Out of the 545 Spring 2011 gradu

ates (strictly undergraduates) from GC, 58 percent of those students walked with some sort of debt; the average debt amongst the 313 students tallied in at $19,000 per student.

In order to go into default, a student must avoid payments of their federal student loans for 270-360 days. But with so many payment plan options offered, including income-based payment, it is increasingly difficult to do this. Yet, students are often unaware of their options, and by the time they discover them have already defaulted.

“There is no reason for a student to default, since even a payment of zero dollars is acceptable payment, if you have zero discretionary income,” said Debbie Cochrane, program director at the Institute for College Access and Success, in The New York Times.

Financial aid encourages students to find ways to fund their education, whether it be through scholarships or loans. However, students find that loans from the past become a burden upon graduating.

“Think about what that payment is going to look like when you’re entering the work force,” Crawley said.

Students who borrow more than they can pay back could suffer lifetime consequences such as not being able to borrow for a house, get a car loan or acquire a job.

But student default rates do not only affect the students borrowing. College campuses with excessive default rates can lose their government accredited ability to give scholarships, including the renowned Pell Grant and Stafford loan. In order to lose this accreditation, colleges must have student default rates of 25 percent or higher for three consecutive years, or a 40 percent default rate in one year.

Nevertheless, starting in 2014, a newly evaluated default process will begin. Unlike the one-year rate, statistics will be evaluated on a three-year rate, which would cause a 4.7 percent default rate to increase to 5.5 percent.

And with HOPE Scholarship changes already in effect, it is increasingly difficult for students to remain at the helm of their financial situations with so volatile a system. But, this is where financial aid comes in.

Every semester Financial Aid offers events to students, hands out literature and provides their knowledgeable services to students, parents and graduates.

“Even students that leave here, they’re still our contact. They’re still our students,” Crawley said.

Financial Aid’s next event will be on Wednesday, Oct. 26, and will be covering the topic of financial literacy and default awareness.

“We try to do things that are receptive to students,” Crawley said.

Moreover, Financial Aid has more than events in store this semester. A teaser on its website showcases a new way for them to communicate with students and parents. Coming in November is The Student and Parent & Information Network.

“It’s going to be multifaceted,” Crawley said. “All about communicating.”

Posted by Nick Widener on Oct 20 2011. Filed under News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.