University of Iowa students pay their bills.
That’s according to U.S. Department of Education statistics, which show increased problems with student loan payment nationally. UI students, in comparison, don’t have as much trouble.
The official national cohort default rate for public and private institutions for the fiscal 2009 is 8.8 percent. This means an average of 8.8 percent of students "defaulted," or didn’t follow the payment terms of their contract, within the two-year window given for them to begin repaying loans. Though the Higher Education Opportunity Act of 2008 extended the window to three years for borrowers entering repayment in fiscal 2009, the recent U.S. Department of Education statistics concern students who began their window on October 1, 2008.
UI officials are excited to report the official default rate on student loan defaults to be 1.9 percent, in both fiscal 2008 and 2009. This is 6.9 percent lower than the cumulative default cohort rate for all institutions and is also lower than the 7.2 percentage, which is specific to pubic institutions.
Mark Warner, the director of UI Student Financial Aid, attributed the difference to students.
"We do whatever we can to minimize the student debt for the student body, but basically, it’s saying that the students who are leaving the UI are, in fact, finding employment and have been in a position for repayment on their student loans," Warner said.
Warner said the last three to five years have remained consistent as far as the number of undergraduate students who graduate with debt. It should be noted that this figure includes only undergraduates, while the default cohort rate for the UI includes graduate and postgraduate students.
"About 40 percent of our [undergraduate] students graduating each of the last three or four years, graduate without any debt whatsoever," said Warner. "Sixty percent have some debt."
The UI percentage has even decreased when compared with the fiscal 2007 percentage, which was more than two. Conversely, the national numbers rose in each. All sectors of higher education institutions increased in this area for the fiscal 2009, which can most easily but not entirely be attributed to the recession, according to Charles Whiteman, the senior associate dean for the Tippie College of Business.
"The period of time where the increase in the default rate took place was basically the depth of the recession so it coincides with the most difficult economic times that we’ve had in 60 years," Whiteman said.
Because of the recession, some individuals have to make the choice between "food on the table" and "a check in the mail to the bank."
"According to the most recently available statistic, we’re growing, but we’re not growing very fast. We’re not growing fast enough to make much of a difference. People are more worried now than they were six months ago about a double dip recession," Whiteman said.
One option mentioned in the press release which has been expanded by the Obama administration is an Income Based Repayment Plan.
Sara Gast, an employee of the Education Department said they are "continuing to reach out to borrowers to let them know about the plan."
"We know that we have had success in preventing borrowers from default when we can touch base with them to discuss their repayment options," Gast said.
