The recently published Cohort Default Rate shows New Mexico’s student loan default rate was the highest in the country at 20.8 percent in the financial year 2011, whereas the national average percentage was 13.7, according to the press release.
Nationally, the default rates went down by a percentage point in the last year, according to the press release.
UNM’s default rate was at 13 percent — up from 8.6 percent in that last report. Western New Mexico University had the highest default rate at 28.3 percent, up nearly 10 points, and the default rates at New Mexico State University and New Mexico Highlands University also increased.
There were more students borrowing more money, and the unemployment rate was very high when these students went into repayment, said Terry Babbitt, associate vice president of enrollment management at UNM.
“There is no question that the weak economy hurt this cohort. Also, branch campuses are counted in the numbers and the default rates are typically much higher than four-year institutions,” he said.
According to the press release, the default rates were calculated using the cohort of borrowers who entered repayment on their Direct Loans or Federal Family Education Loan Program loans between Oct. 1, 2010, and Sept. 30, 2011, and who defaulted before Sept. 30, 2013.
“While it’s good news that the default rate decreased from last year nationally, the number of students who default on their federal student loans is still too high,” Secretary of Education Arne Duncan said in the release. “We remain committed to working with postsecondary education institutions and borrowers to ensure that student debt is manageable.”
But Babbitt said UNM students are no quite in dire straits. Only 634 UNM students defaulted, compared to more than 1,000 at both New Mexico State University and Arizona State University.
“The primary culprit of defaulting on student loans is not completing your degree or credential,” he said. “Eighty percent of defaulters did not complete their program.”
Another aspect that influences the UNM and NMSU default rate is that it includes students from all of the schools campuses, who have defaulted by failing to make payments 270 to 360 days or more after the six-month grace period, depending on the type of loan, UNM and NMSU officials said.
The U.S. Department of Education releases official cohort default rates once per year. The financial year 2011, official three-year cohort default rates were delivered to both domestic and foreign schools on Sept. 22, 2014.
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According to the Department of Education statement, a three-year cohort default rate is the percentage of a school’s borrowers who enter repayment on certain Federal Family Education Loan Program or William D. Ford Federal Direct Loan Program loans during a particular federal fiscal year and default or meet other specified conditions prior to the end of the second following fiscal year.
The Department of Education would also continue working with institutions to ensure they are providing their students with the information and guidance the students need to repay their loans after they graduate, Duncan said.
Sayyed Shah is the assistant news editor at the Daily Lobo. He can be reached at assistant-news@dailylobo.com or on Twitter @mianfawadshah.
