To see a searchable database of the three-year student loan default rates for Georgia’s higher education institutions, go to MyAJC.com.
The percentage of Georgia students who defaulted on their federal student loans has dipped slightly for the past three years, mirroring a national decline across all higher education sectors.
The 14.5 percent overall default rate for Georgia's 131 institutions reviewed was slightly higher than the national average of 13.7 percent, according to data released Wednesday by the U.S. Department of Education. The newest data take into account borrowers who began paying back their loans in fiscal 2011 and cover the first three years that borrowers are required to pay back their loans. In Georgia, 18,332 borrowers were in default; 126,041 entered repayment.
The national rate was down from 14. 7 percent in fiscal 2010. Georgia’s 2010 default rate was 15.3 percent.
Default rates don’t count borrowers who receive deferrals or forbearance because they are still in school, get hardship waivers or are in income-based repayment.
No Georgia schools were included in the 21 institutions, mostly for-profit institutions and cosmetology schools, that face a loss of federal aid for posting three consecutive years of default rates higher than 30 percent. But a few Georgia institutions have had two years of rates higher than 30 percent, and they could face sanctions if the rates do not improve next year. The default rate is likely to be a key part of the college rating system the Obama administration is expected to release later this year.
Despite the default dip, federal officials say the rate remains too high. Education experts blame the still soft economy for some of the problems, and there has been a renewed call to control college costs.
“Kids are going to school, getting educations and can’t find a job. If they are finding jobs, the wages they are earning are minimal,” said Kimura Leonard, associate financial aid director at Philadelphia College of Osteopathic Medicine in Suwanee. “To pay a student loan is the least of their concerns. They don’t want to default, but they are more focused on paying the basic day-to-day necessities, like food and shelter.”
The average student loan debt for college students climbed to more than $29,000 per student last year (just over $23,00 for Georgia students). Overall student loan debt has risen to about $1.2 trillion nationally, with about $1 trillion of that amount attributed to federal loans, according to the Consumer Financial Protection Bureau.
The federal default rate is an alarming number, said Ron Hart, the managing director at Morgan Stanley Wealth Management based in Atlanta.
“Even at the peak of the mortgage crisis the default on mortgages was only about 10 percent overall,” he said. “Colleges really have to get costs under control.”
But in the overall market, the roughly 651,000 borrowers in default across the country won’t sink the economy, said Aleksandar Tomic, an associate economics professor at Mercer University. Georgia ranked fifth out of eight states Tomic examined for a regional analysis. Alabama, North Carolina, South Carolina and Tennessee showed fiscal 2011 default rates lower than Georgia.
“We’ve seen a (default rate) decrease nationally and in Georgia,” he said. “The employment situation in Georgia has been slightly worse than the national average, which is not only putting pressure on colleges, but also the state economic situation. There is no easy one-size-fits-all solution to end this today.”
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