A bad economy has sent many college grads into default on their student loans.
Nationally, the rate of former college students defaulting on their federal student loans shot up this year -- with 8.8 percent of borrowers now in default as opposed to just 7 percent last year, according to the U.S. Department of Education.Newly released statistics
, which cover the fiscal year 2009, show that 7.2 percent of those obtaining loans for public schools are now in default, with 4.6 percent at non-profit private institutions. The much-maligned for-private higher-ed institutions do worst of all, with fifteen percent of loan takers now in default.
So how about St. Louis' local institutions of learning? The good news is that most of them are doing much better than the national average. But that's not true of everyone.
Harris-Stowe State University
, the historically black university in Midtown, saw its default rate jump from 12.7 percent in 2008 to 16.2 percent in 2009, putting its default rate well above the national average for public schools. Saint Charles Community College
also saw its default rate jump -- from 4.6 percent to 6.5 percent -- although it remains below the national average.
And while Saint Louis Community College
has lowered its default rate -- from a high of 8.1 percent in fiscal year 2007 to 7.2 percent in 2009, it remains at precisely the national average.
But the good news is that the state's biggest university, the University of Missouri-Columbia
, is doing significantly better than the national average. Its default rate was only 2.9 percent in 2009. The University of Missouri-St. Louis
also did better than average, with a default rate of 4.3 percent (up just 0.3 percent from 2008).
And St. Louis-area private schools continue to do pretty well, too. Both Washington University in St. Louis
(2009 default rate: 2.1 percent) and Saint Louis University
(2.2 percent in 2009) are well below the national average.
notched a 4 percent default rate, while Fontbonne University
brought up the rear for local private schools with a 5.6 default rate. It was the only private local university we surveyed that notched a higher default rate than the national average.
Missouri's overall default rate
is currently at 7.6 percent -- which sounds pretty lousy (that's a lot of former students who just can't pay!) -- but it's better than average. Just imagine if we were Arizona: a whopping 16 percent of federal student loans in that godforsaken state are in default.
A group called signon.org
is now pushing for President Obama to forgive student loan debts across the country. Not surprisingly, they've quickly managed to get nearly 200,000 signatures on their online petition.
However, as the New York Times reported earlier this week
, some of the defaulting graduates may have options they don't know about:
Many borrowers, even those who are unemployed or earning little, can
avoid default by participating in an income-based repayment program that
began in 2009 but is not as widely used as might be expected. Under the
program, borrowers who pay 15 percent of their discretionary income for
25 years -- 10 years if they are in public service -- can have the rest
of their federal student loan debt forgiven; in 2014, that will go down
to paying 10 percent of discretionary income for 20 years.
As one expert told the Times
, "in the age of income-based repayment, 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."