UNL students show low rate of loan defaults

The University of Nebraska-Lincoln has an unusually low rate of students defaulting on their loans, according to studies conducted by the Nebraska branch of the National Student Loan Program.

The national average for student loan defaults was 6.7 percent for the 2007 fiscal year. In the state of Nebraska, the average for four-year institutions was 4.3 percent. UNL's rate was calculated to be 1.4 percent, considerably lower than both the state and national average.

While there is apparently no direct correlation for why the rate is so low, studies conducted by NSLP show that different demographics served by lenders, especially their respective socioeconomic backgrounds, play a large role in determining default rate.

According to Randy Heesacker, president and chief executive officer of NSLP, one of the biggest factors for students not paying off their loans is simply lack of communication.

"In many cases, after students leave school, they move around a lot and may fail to notify the lender, and then the lender has difficulty contacting the student," Heesacker said. "Many of the defaults we see are cases where the borrower could not be located. Communication with the lender is definitely key and guarantors facilitate that communication."

While this is definitely a considerably better rating than the majority of schools in the nation, however, the long-term effects of loan defaults can still seriously impact the borrower.

"The default rates are calculated based on the number of borrowers, not on the amount of loans, so they don't reflect the whole story," said Sharon O'Neal, director of corporate communications for NSLP.

"Also, the national, state and institutional default rates are rising, and they are expected to continue to rise because of the employment and economic downturn."

In the face of the economic recession, studies have shown that more people are going to or are already returning to college. Specifically, many post-9/11 soldiers are going to school, specifically community colleges.

Students default on their loans when they fail to pay off or make arrangements to pay off their loans within the allotted time frame. Most universities offer a six-month grace period following graduation. However, if arrangements are not made to pay off the loan within 270 to 315 days following the grace period, then the student's loan is considered to be in default.

"The average student loan debt burden for an undergraduate at a public college is about $19,000," Heesacker said. "NSLP provides financial literacy and repayment counseling to educate students on responsible borrowing, how to pay for college and the student loan repayment options that best meet their needs. All of our counselors are accredited and willing to help."

In order to get the word out about financial education, Gov. Dave Heineman declared the week of November 9-13 to be "Financial Literacy Week." During that week, NSLP will be co-sponsoring along with Phi Beta Lambda, a national business student organization, a series of online courses to help educate students about the nature of loans and about responsible and smart borrowing.

Students who partake in at least one of the eight online courses will be entered into a drawing for two $500 scholarships.

"There are serious consequences for defaulting on a loan, but borrowers do have options," Heesacker said. "They just need to ask for help."

ALEKZAYAS-DORCHAK@DAILYNEBRASKAN.com