Most Chicago-area colleges see drop in student loan defaults

SHARE Most Chicago-area colleges see drop in student loan defaults

A majority of major Chicago-area colleges and universities boast lower student-loan default rates than the new national average reported Wednesday, government data show.

Local laggards say they’re using everything from big-data searches to financial literacy programs to bigger scholarship handouts to keep kids out of financial trouble.

The rate at which American students defaulted on repaying their college loans dropped to 13.7 percent from 14.7 percent the year before, the U.S. Department of Education announced Wednesday. The numbers mean that about one in seven borrowers who left college or graduate school in the fiscal year that ended Sept. 30, 2011, had defaulted on their student loans, compared with those who had left a year earlier.

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Education Department officials said the rate is still too high, but cited improvements from a strengthening economy and President Barack Obama’s initiatives to help students, including moving students at risk of default into affordable payment plans and capping monthly repayment amounts.

Any school with a default rate of 30 percent or more for three straight years or with a 40 percent rate for the latest year, or both, risks losing federal financial aid. One of 21 such institutions listed Wednesday by the Education Department is the Merrillville Beauty College in Indiana, which had a 45.2 percent default rate in fiscal 2011; a 30.7 percent rate in 2010; and an 8.3 percent rate in 2009. A woman who answered the phone Thursday at the beauty college said the school is no longer accepting students and is moving to Ohio.

Default rates at for-profit schools are historically higher than those at other institutions. The default rate was 19.1 percent at for-profits, down from 21.8 percent. It stood at 12.9 percent for students at public schools, down from 13 percent, and at 7.2 percent at private, nonprofit schools, down from 8.2 percent.

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A spokesman at Columbia College Chicago, which had a 13 percent default rate in the latest data, down from 14.8 percent the previous year, said the college constantly tries to make students aware of financial aid resources and has increased its student scholarships by 178 percent in the past four years, to $32 million in 2013-2014 from $11.5 million in 2009-2010.

A spokesman at Northern Illinois University in DeKalb, whose latest default rate stood at 9.4 percent, down from 9.8 percent, said the university is identifying students at high risk of default and recommending default prevention measures for them.

The university is using Education Department tools “to access the list of defaulted borrowers and compile academic, completion, financial and student profile information for each,” spokesman Paul Palian said.

A spokesman for Indiana University-Northwest in Gary, which had a 13.9 percent default rate, down from 15.5 percent, said “borrowing is down about 25 percent on our campus in the number of loans and the dollars.”

“In addition, IU Northwest has joined other IU campuses in delaying the disbursement of financial aid funds until the second week of classes. This means that if students withdraw from some or all of their classes they will end up borrowing less,” spokesman Tom Wyatt said.

A spokeswoman for DeVry, which had an 18.5 percent rate, down from 23.4 percent, said it has boosted its efforts to inform students about financial aid, including introducing “rigorousdefaultprevention programs, financial literacy training, and entrance and exit counselingso students are aware of their loan commitments and requirements.”

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