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Archive for Thursday, November 13, 1997

KU, MEDICAL SCHOOL LOAN DEFAULT RATES DOWN

November 13, 1997

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Among the Kansas Board of Regents universities, Kansas University and the KU School of Medicine maintained the two lowest default rates for fiscal year 1995.

Students at four-year public institutions such as Kansas University are still far less likely to default on federal student loans than their counterparts at private schools and community colleges, according to U.S. Department of Education statistics released Wednesday.

Throughout the state, the default rate dropped below 10 percent for the first time in several years, mirroring continued declines at the national level.

"There's a lot of effort and attention nationally to the issue of loan indebtedness and to preventing (students) from going into default," said Diane Del Buono, director of the KU Office of Student Financial Aid. "I think as a nation we are recognizing that educational debt is a serious issue."

Experts have attributed the decline to, among other things, an increase in flexibility and options for repayment.

Larry Viterna, vice president of USA Group Inc., a nonprofit loan guarantee agency, said the improving default rate in Kansas is the result of cooperation. Schools, lenders, the guarantee agency and the Department of Education are "all working together to ensure that we have a more informed consumer when it comes to student loans."

USA Group monitors loan repayments for the federal government. The state has no loan monitoring agency and neither the state Board of Education nor the state Board of Regents tracks loan repayments.

In fiscal year 1995, taking into consideration the 97 postsecondary institutions in Kansas, 9.9 percent of the 27,730 borrowers who were in the repayment process had defaulted.

KU weighed in at 5.1 percent, while the Kansas University Medical Center reported a 1.8 percent default rate. The rates were the two lowest among Board of Regents universities (Kansas State University's School of Veterinary Medicine and KSU's Salina campus rates were unavailable).

The highest default rate in Kansas was at Remington College in Wichita, which now risks losing its eligibility to participate in federal loan programs. That college's rate was 38.1 percent. Haskell Indian Nations University had the lowest rate, 0 percent. However, tuition, room and board is free for students who attend Haskell.

Haskell, funded by the Department of the Interior, does offer Pell grants and other need-based grants, which are available throughout the country as part of the federal aid system.

At KU, about 40 percent of the student body takes out loans for school at an average of $13,345 each.

Six other Kansas institutions had default rates less than 5 percent, including Baker University, 3.7 percent, and Barclay College at Haviland, 1.4 percent.

The highest default rates -- 15 percent or more -- were reported from a number of the beauty schools, technical schools and community colleges in Kansas.

Del Buono said the high numbers, in some cases, were representative of more at-risk student populations.

Some institutions "educate a very urban, more nontraditional group of students," she said. "Some of those are less likely to complete the degree ... They don't have a high debt burden, but they also have not acquired the skills that would make them employable."

At Haskell, students do not default on loans because the university does not participate in federal loan programs.

"We feel that due to the nature of our school and the fact that tuition and room and board are provided to the students, that we would be doing students a disservice by making loans available," said Gary Campbell, Haskell financial aid administrator. "Almost all students nowadays will end up with some sort of loans. And that's a frightening thing, I think."

-- Matt Gowen's phone message number is 832-7222. His e-mail address is gowen@ljworld.com.

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