Missouri student loan default rate rises
The state rate has increased to more than 6 percent.
Published Sept. 18, 2009
The student loan default rate for Missouri has increased over the last year.
For all of Missouri, the previous student loan default rate rose from 4.3 percent to 6.09, according to a Missouri Department of Higher Education news release.
"It's the economy," said Christine Lindstrom, U.S. Public Interest Research Groups Higher Education program director. "Things are tight and students who graduate with a lot of debt face a higher financial risk than those who don't. As the economy fluctuates, they may be unemployed for a period of time and then suddenly a monthly payment may become untenable."
According to the MDHE news release, more than 4,600 borrowers from 160 schools are in default, but 75,925 people are repaying their student loans on time. In the news release, MDHE Assistant Commissioner Leanne Cardwell said this rate is low compared to default rates in 1990, which were more than 20 percent.
Lindstrom said the student loan default rates correspond to rates of employment.
"Even as the fundamentals of the economy may be normal, it's really going to depend on job recovery," she said. "Until then, I'd expect the rate to keep going up."
MU has not seen an extreme increase in student loan defaults; the rate increased by 0.1 percent to 2.4 percent, according to the MDHE news release.
The minimal increase in defaults can probably be attributed to MU grads being able to pay off their loans after graduation, Undergraduate Vice Provost Jim Spain said.
MU Director of Financial Aid Jim Brooks said the low default rate for MU students shows they are responsible.
"They take their loan repayment seriously," Brooks said. "I would think that the higher default rates are more with the non-traditional colleges and commuter schools."
Brooks said students at MU are making more progress after they graduate, so they can better pay off their loans. Many MU students have a plan in place to pay back their loans.
"I'm going to be working over summer break, saving up little by little to pay it back," freshman Michael Conner said.
Freshman Isaiah Horbert said he was not too worried about paying back her loans.
"I was planning on getting a job or a few jobs over this summer and paying it back," Horbert said.
MU offers tutorials to students when they enter into a loan agreement and also offers optional exit counseling that explains their responsibilities as borrowers upon graduation, Brooks said.
"Students should be proactive and take advantage of things like financial aid and financial planning, so they can be prepared to manage their time and money after graduation," Spain said. "Get prepared."
-- Staff Writer Wes Duplantier contributed to this report.