Student loan default hits all-time low
By CHRIS DESBARRES
The Federal Student Loan default rate dropped to an all-time low of 8.8 percent in 1997, according to Secretary of Education Richard W. Riley.
This marked the seventh straight year of decline in the rate, which reached its peak of 22.4 percent in 1990. The 1997 figures are the most recent reflection of the government's effort to collect on student loans.
Riley cited the strong economy, rising wages, increased productivity and low unemployment as reasons for the low default rate. He also praised universities for "pioneering new ways to help students understand and meet their obligations."
The federal government provided 8.4 million loans totaling $34.1 billion for 1997. The amount of loaned money has more than tripled since 1990 when the government offered $11.7 billion in 1990.
Even with the low default rate, however, some institutions are still burdened by excessive defaults. "This year," Riley said, "42 schools are faced with loss of loan eligibility." The schools that may possibly be affected are schools where the default rate has been over 25 percent for three consecutive years or a one-year default rate of over 40 percent.
The government collected more than $2.2 billion in 1999 on previously defaulted debts. "We don't give up when a student defaults. We work very hard with them to help them re-enter repayment and meet their obligations," said Riley.
Notre Dame and Saint Mary's more than exceeded national standards. For the third consecutive year, Notre Dame's rate was at or below 2 percent, coming to 1.8 percent, and Saint Mary's stood at 3.1 percent.
"It's a commentary on the types of students who are graduating from Notre Dame," said Gene Pilawski from the Notre Dame Office of Financial Aid. "To be right around a 2 percent default rate is something that the University really prides itself on."
When asked about the nature of the success, Pilawski explained, "It's the students, and we also work hard to try make our students aware of their responsibilities as borrowers. Before every student leaves, we conduct a student loan exit interview to try to say that this is very important and here's what to expect."
It's no secret that Notre Dame is an expensive institution, but, Pilawski said, "The Trustees have done a wonderful job of making financial aid a priority of the University."
The University has been able to meet almost all of the financial needs of the current freshman and sophomore classes. "We try to make it as affordable as possible with all of the financial aids programs that we have available," Pilawski said.
"We're proud of our low default rate, we're proud of our student's responsibility and we're pleased with the University's efforts at making financial aid a priority," said Pilawski.
For information concerning student aid and government loans, contact the Office of Financial Aid or the Department of Education.
All News Stories for Thursday, October 14, 1999