September 25, 2014
By Richard Doherty, AICUM President
The United States Department of Education just yesterday released its annual student loan default rates for all colleges and universities. The department measures the percentage of borrowers who defaulted on federal student loans within three years after entering repayment, in this case looking at borrowers who entered into repayment in FY 2011.
According to yesterday’s release, the national three year default rate decreased to 13.7 percent (from 14.7 percent), reversing a two year trend of default rate increases. This number reflects default rates of all institutions nationwide, including 2 and 4 year public and privates, community colleges and for-profit institutions. While this overall number remains troubling, it is important to look beyond the industry-wide data and examine individual state and sector trends.
Here in Massachusetts, the numbers across the board are significantly better and speak to both our high-quality institutions – both public and private – and the strong job market for graduates of a Massachusetts college. The three year default rate in Massachusetts for the 169 participating schools was 8.1 percent in FY2011, down from 8.5 percent in FY2010. Overall, Massachusetts has the third lowest default rate in the country, trailing only North Dakota (6.1 percent) and Nebraska (7.7 percent).
The news for AICUM institutions is even better. If you dive deeper into the data, the 3-year default rate for AICUM institutions only in FY2011 has dropped to 4.9 percent! Put another way, more than 95 percent of Massachusetts private college grads are keeping up with their loan obligations. In most classrooms, a 95 would get you an A!
The low default rate at AICUM institutions speaks to the high-quality education that is producing well-educated workers qualified for well-paying jobs, which in turn allows borrowers to manage their loan payments responsibly. The decrease can further be attributed to a number of steps that our colleges are taking to ensure that college remains affordable, students borrow only what they need and that they understand the repayment options available to them that help to keep their loan payments more affordable.
Student default remains a national concern for higher education. The community as a whole must continue to take steps to reduce the overall rate. However, Massachusetts’ lower rates shows that a commitment to transparency, counseling and working with student borrowers can yield a lower default rate and alumni well-prepared to responsibly manage their student loan debt upon graduation.