National student loan default rates continue to climb
FARGO -- Nationally, the number of students defaulting on government education loans is up for the sixth consecutive year.
The national student loan default rate climbed to 10 percent for students who began paying back their federal student loans in fiscal year 2011 -- up from 9.1 percent in 2010, according to data released by the Department of Education this week.
Loan default rates are lower than average for graduates of schools in Minnesota and North Dakota.
While North Dakota students leave school with an average $27,425 in debt, very few actually enter default. The default rate for North Dakota students entering repayment in 2011 was 4.3 percent. Minnesota's rates are closer to the national average at 8.6 percent.
Default rates are even lower than state averages at Fargo-Moorhead area schools, but increasing in some cases.
Rates are low but still increasing at North Dakota State University. The default rate for 2011 was 2.5, up from 2.1 two years before.
Though Concordia College graduates on average carry a higher debt burden than other students in the Fargo-Moorhead area, its default rate is the lowest in Fargo-Moorhead at 1.4 percent.
The average debt of a 2011 Concordia graduate was $35,240, but Steve Schuetz, vice president for enrollment, said the school's low default rate reflects "students' ability to pay that debt."
Entrance and exit counseling is mandated for federal borrowers, and personal financial aid counseling is required at area schools.
Still, Schuetz said students and parents are asking more questions about the true cost of attendance and student debt than before.
"They're inquisitive about the amount of debt and type of debt that they take on and want to make sure they are making a wise investment," he said.
The Department of Education tracks the number of students who did not make payments on their Federal Stafford Loans and Direct Loans for 360 days as a proportion of the number of borrowers entering repayment in a given fiscal year. There are incentives for schools with low rates and consequences for those that are consistently graduating students who don't pay back their loans.