More students are defaulting on their federal student loans than ever before, including those who have attended local colleges and universities, according to data released this week by the U.S. Department of Education.
The Department of Education tracks the number of students who default on their federal student loans and calculates two- and three-year default rates, showing the percentage of borrowers who were required to start repaying their loans but defaulted on payments. The department is transitioning from using the two-year rate as the standard to the three-year rate.
At the University of North Texas, Texas Woman’s University and North Central Texas College, the two-year default rates have dropped since 2010 and are below the state average of 11.8 percent. NCTC is the only local school above the national default rate of 10 percent, with 11.2 percent of former students defaulting on federal loans. UNT is at 7.8 percent, a 1 percent drop from 2010, and TWU is at 4.7 percent, down from 6.9 percent the previous year.
“Our default rate has always been well below the national average and well below the Texas average, and that’s significant because institutions with really high default rates lose the right to access some federal aid,” said Richard Nicholas, TWU vice president for student life.
However, the numbers for the three-year default rates increased from 2009 to 2010 — the latest three-year data released. The state average for loans that began repayment in 2010 is 17.3 percent, and the national average is 14.7 percent.
NCTC had a significant drop from 2009 to 2010, from 30.2 percent to 22.8 percent, but TWU and UNT both increased over the same time period. TWU increased from 8.1 percent of former students defaulting on student loans to 8.7 percent, and at UNT, the rate increased by 1.5 percent to 11.8 percent.
The schools have all started working to combat the problem by working with students who are taking on debt as well as recent graduates. The University of North Texas implemented a loan default aversion plan in 2011, which requires all federal loan borrowers to complete loan management counseling each year they take out federal loans, said Barbara Macdonald, assistant director of loans.
“We implemented the program when we saw that default rates were climbing, and we felt we needed to provide our students with a program that will help them manage their loan debt,” she said in a statement.
Since 2009, NCTC has added additional staffing to help students manage and understand their loans, said Billy Roessler, vice president of student services. That year was the first time they had enough students with federal loans to be able to calculate the default rates, and the number of student borrowers in repayment jumped from 175 in 2009 to 1,199 in 2011.
TWU has also expanded its programs, adding more frequent financial literacy workshops for students that have federal aid. This program has similar goals to UNT’s program, helping students understand what it means to borrow money.
“We’re hoping that has an impact on their borrowing habits, and the understanding of the obligation to pay it back,” Nicholas said.
JENNA DUNCAN can be reached at 940-566-6889 and via Twitter at @JennaFDuncan.