The percent of GW students defaulting on their federal student loans is shrinking, bucking a national trend of surging rates, according to new federal government and University data.
Less than 1 percent of undergraduate and graduate GW students defaulted on their federal student loans in 2009, a further decrease from 2008, when 1.2 percent defaulted.
The national student loan default rate jumped up nearly 2 percent to 8.8 percent for 2009, a 12-year peak, Department of Education data released Sept. 12 shows.
Those numbers represent student borrowers nationally who began paying back their loans between Oct. 1, 2008 and Sept. 30, 2009, when more than 320,000 out of 3.6 million individuals defaulted.
At GW, 34 of the 3,663 borrowers in the repayment phase defaulted. For-profit schools saw their rates spike the most, from 11.6 percent to 15 percent, while public schools have a 7.2-percent default rate. The default rate for private institutions reached 4.6 percent.
The growing national default rate is a “huge concern,” Associate Vice President for Financial Assistance Dan Small said, but GW is fortunate the vast majority of its students repay federal loans. The federal government can strip schools of aid funding if too many alumni default on their debt.
“We can’t rest on our laurels… All of us have to make sure that we just keep reminding students about the responsibility of paying it back,” Small said.
Economic downturn is a key reason the national federal student loan default rate has nearly doubled since 2003, Rich Williams, a higher education advocate for the U.S. Public Interest Research Groups, said.
“One of the things we’re seeing is that many states are cutting back funding, thus when a parent loses a job or a student loses another source of funding, the burden is on the student and the consequences are serious,” Williams said.
Defaulting on student loans can adversely affect credit history, job placement and an individual’s ability to rent an apartment.
The way default data is calculated changed this year to measure defaults based on a three-year repayment time period, rather than the previous two-year system.
“By looking at a three-year average we were getting a better picture,” Small said. “By the time the third year rolls around you should be into some type of repayment.”