||Schofield Hall 218|
||Eau Claire, WI 54702-4004|
UW-Eau Claire Students Have|
Low Loan Default Rates
MAILED: Nov. 18, 1998|
University of Wisconsin-Eau Claire students are among the most responsible in the state when it comes to paying back their federal student loans.
UW-Eau Claire's 1996 cohort default rate was just 2.3 percent meaning almost 98 percent of UW-Eau Claire students who borrowed money through two federal loan programs are paying back their loans, said Kathleen Sahlhoff, director of Financial Aid.
"This number strongly reflects the quality of our students," Sahlhoff said. "The students understand their responsibilities and they follow through. That makes a big difference not only to them and their credit rating but to the people who follow them. It means the programs will be here to serve the students who follow."
With more people paying back their loans, more dollars are available within existing federal aid appropriations for new loans. "Our students are doing their part they're fulfilling their end of the bargain," Sahlhoff said.
UW-Eau Claire's default rate has improved in each year of the most recent three-year loan cycle. Its default rate was 2.7 percent in 1994, 2.6 percent in 1995 and 2.3 percent in 1996. The 1996 rate reflects the most recent data available.
Within the UW System, only UW-Green Bay's 1.8 percent default rate was lower than UW-Eau Claire's 2.3 percent default rate in 1996. UW-Stevens Point also had a rate of 2.3 percent. Other System schools' default rates varied from 2.8 to 10.2 percent.
"These are astounding numbers when you look at what default rates across the country were just a few years ago," said Sahlhoff, noting that the 1996 national default rate dropped to 9.6 percent, bringing it below 10 percent for the first time ever and to less than half of the 1990 high of 22.4 percent. "It's amazing to have a school worried about a 4 percent rate because it looks high compared to other institutions."
"It's good news for schools, good news for the students and good news for the loan programs," Sahlhoff said of the lower rates. "They are being repaid so it will keep the programs viable. And it keeps taxpayers supportive when they see that the money is being repaid."
Student loan programs are expensive for the government to run because interest does not accumulate while borrowers are still in school and the interest rates remain low when the borrowers' grace period ends, Sahlhoff said. "In the past, many students did not realize how much of a gift this is," she said.
Educating borrowers about their responsibilities and putting penalties in place that affect students who default and institutions with a high number of students who default have helped bring the rates down throughout the country, Sahlhoff said. Years ago, when default rates were high, the government put little effort into the collection end of the program, she said, noting that steps also were taken in recent years to make repayment easier and to work with people who were struggling to make payments.
"Now there is a whole series of credit problems and other ramifications that will occur if a student defaults," she said, explaining that the default rates reflect only those borrowers who are making no effort to pay their loans and do not include those people who are struggling to make their payments.
During the 1997-98 fiscal year, 6,800 UW-Eau Claire students are receiving some type of financial aid and 45-50 percent of the university's student body receives some form of needs-based aid, Sahlhoff said. The average indebtedness of the 1997 spring graduating class was $11,309, she said.
Janice B. Wisner
UW-Eau Claire News Bureau
Updated: Nov. 19, 1998