June 20, 2024

Student loan default rate hits all-time low of 5.4 percent

The national student loan default rate for Fiscal Year (FY) 2001 (the most recent data available) fell to the lowest point in history, with 5.4% of student loan borrowers reported as defaulting on their Federal Family Education Loans or Direct Loans, according to figures released by the U.S. Department of Education (ED). This all-time low rate for FY’01 follows a small increase last year, when default rates increased from 5.6% (FY’99) to 5.9% (FY’00). The national default rate peaked in 1990 at 22.4%. The data, provided by ED, represents “a snapshot in time of borrowers who began repaying their loans between Oct. 1, 2000 and Sept. 30, 2001, and who defaulted before Sept. 30, 2002.”
ED also announced that for the first time in the history of the federal student loans programs, every school participating in the federal student loan program has a default rate low enough to remain eligible for federal assistance. Current law mandates that schools lose eligibility for federally funded student aid programs if default rates exceed 25% for three years in a row or 40% in any single year.
While the loan default rate for Utah schools increased slightly from FY’00, Utah’s rate of 3.3% ranks 4th best in the nation behind South Carolina, New Hampshire and Vermont. The nine Utah System of Higher Education schools rates are: College of Eastern Utah, 7.7 percent; Dixie State College, 6.2 percent; Salt Lake Community College, 5.5 percent; Snow College, 5.2 percent; Southern Utah University, 3.2 percent; University of Utah, 2.3 percent; Utah State University, 2.3 percent; Utah Valley State College, 1.9 percent; Weber State University, 4.0 percent.
Executive Director of Utah Higher Education Assistance Authority (UHEAA), Chalmers Gail Norris said that “Utahn’s have a history of understanding the value of investing in their education. Part of the investment involves repaying student loan debt, and UHEAA’s record of low student loan defaults reflects the importance Utah’s students place on their education.
UHEAA has made it easier for student loan borrowers to avoid default by providing a Borrower Benefits program that is one of the best in the nation. Students who take advantage of the UHEAA Borrower Benefits receive significantly reduced fees and interest rates on their loans.”
Bill Osborn, CEU’s financial aid director discussed the school’s 7.7 percent rate. “It is actually much lower than it has been in years past. There was a time when we were over 30% when all the other schools were in the low teens. Last year the default rate at CEU was 7.4 and the year before that, 6.2. The lowest ever was 4.6 in 1998. The default rate generally rises when the economy is bad. As you know, Southeastern Utah’s economy hasn’t been very good for many years, this reflects on CEU’s default rate.
“In addition, CEU has had and continues to have vocational programs from which a great number of loan defaulters originate. Surprisingly, one of these is the nursing program. In years past it was the trucking/heavy equipment program but due to some extra measures taken by our office, loan defaults have declined in this particular program. It is always disheartening to see CEU’s rate higher than the other schools in the state; however, I feel good that it has been reduced over the years to where we now are.
Student loan borrowers who need assistance repaying their student loans should contact UHEAA, at 1-877-336-7378, to learn about the options available to avoid delinquency and default.