U.S. Secretary of Education Rod Paige announced last week that the national cohort default rate has fallen to the lowest rate ever5.6 percent for fiscal year 1999and credited the colleges and universities that have worked diligently to reduce default rates at their institutions.
Ken Sears, associate director of financial aid, said West Virginia Universitys default rate was 4.2 percent for the same period, below West Virginias 7.3 percent average.
The student loan default rate refers to loans made from either the Family Federal Education Loans (FFEL) from private lenders like banks and credit unions, or Federal Direct Loans made directly by a school.
WVU is a direct lender and lends approximately $63 million each year in the Federal Direct Student Loan program and another $12.7 million in the Federal Direct Parent Loan program. Out of a total of 4,049 borrowers currently in repayment, WVU has 174 borrowers who are considered delinquent (at least 270 days without a payment).
Like colleges and universities across the nation, WVU tries to decrease the likelihood of student loan default by educating student borrowers during entrance counseling sessions prior to student loan disbursement and exit counseling sessions before borrowers leave school.
“Students can choose from among 10-12 sessions offered each semester at varying times of the day,”Sears explained.
Student loan counseling also is available on-line at the Financial Aid Office Web site,www.wvu.edu/~finaid. The U.S. Department of Education recently recognized WVU as one of the top schools nationally for student loan counseling utilizing the web, Sears added.
In addition, he said the Financial Aid Office has worked with Operation Jump-Start and the College Board each fall to offer in the WVU residence halls a series of financial management seminars that address topics such as budgeting and the use of credit cards.
Schools with excessive default rates are held accountable for the default rates of their students. Schools with default rates of 25 percent or greater for three consecutive years, or greater than 40 percent for one year, face loss of eligibility to participate in the loan and/or Pell grant programs.
By the end of fiscal year 2001 on Sept. 30, approximately 5.26 million students will have borrowed $33.9 billion in federal student loans, more than triple the $11.7 billion borrowed in fiscal year 1990.