GW undergraduates default on significantly fewer federal student loans compared to their peers nationally, according to newly released government data.
Fewer than 1.5 percent of undergraduates defaulted on their federal student loans in 2008, according to data from the Department of Education. The GW default rate is about 6 percent less than the national average for private institutions.
Only 47 of the 3,211 GW graduates who entered the repayment phase of their loans in 2008 defaulted by Sept. 30, 2010. Georgetown University’s default rate is just slightly higher than GW’s. American University’s rate is less than 1 percent higher than the default rate at GW.
For-profit institutions showed the highest default rates, with 25 percent of borrowers unable to pay back loans. Public colleges and universities had default rates of 10.8 percent. Loan default data is grouped into cohorts by type of institution – public, private or for-profit.
The data show that default rates are on the rise, up 0.3 percent from 2007.
Jane Glickman, a spokeswoman for the Department of Education, said many students and their families have been placed in difficult situations with the recession.
“If it’s between paying off your mortgage and repaying a student loan, most people will pay off their mortgage,” Glickman said.
Students who default on federal loans can face tax fines, lawsuits or see their paycheck garnished.
Associate Vice President for Financial Assistance Dan Small said GW’s default rates may be low because the University sends warnings to students reminding them to factor loan payments into their monthly bill cycle after graduation.
“Basically, we are trying to alert the student to prepare [them] that after their grace period the loan repayment will begin,” Small said.
Many students also defer payments by continuing with their education, Small said.
Institutions with rates higher than 30 percent starting in 2014 may face the risk of cuts to federal loans or Pell Grants.
The data mark a new system for evaluating higher education institutions on federal student loan default rates by monitoring repayment in 3-year time blocks, instead of the current 2-year system.
“The government is trying to check whether the students’ education is being enhanced, whether they are being able to get jobs and pay off their loans,” Small said.