Nearly 400 Worcester Students have Defaulted on Loans Since 2009
Wednesday, October 10, 2012
A total of 390 of the 4,780 students at the city's 11 schools have fallen behind on loan payments over the past three years. At 8.2 percent, Worcester students defaulted at a higher rate than the statewide default rate of 7.3 percent the Department of Education found among the three-year cohort.
However, they were still below the national student loan borrower default rate of 13.4 percent.
The Toni & Guy Hairdressing Academy boasted the worst default rate, with 36.8 percent of students entering repayment defaulting on their loans in the past three years.
UMass Medical School had the lowest three-year default rate at 0.6 percent. Only one of the 154 students who entered repayment failed to keep up with their payments.
Borrowers Don't Explore Options
According to Allesandra Lanza, corporate public relations manager at American Student Assistance, a non-profit organization dedicated to helping students and graduates manage and repay their college loan debt, there are plenty of options for borrowers struggling to make payments on their federal loans.
"What we see as really a big problem is a lot of people just simply don't know that these programs exist," she said.
"The recession and the poor job market are leaving a lot of people thinking they have no options."
"The first thing when you start getting into financial difficulty is contact the lender, because there's no getting away from these loans," said Mark Kantrowitz, the publisher of FinAid.org and a well-known financial aid and college planning author.
"It's almost impossible to discharge these loans in bankruptcy," he added, pointing out that the government can garnish up to 15 percent of a borrower's wages and intercept income tax refunds in order to pay down the debt.
"The government is going to get its money one way or another."
In addition to the repayment programs outlined by Lanza, Kantrowitz also noted the option of income-based repayment, which determines a student borrower's monthly loan payment based on his or her discretionary income when their annual earnings exceed 150 percent of the federal poverty line.
How To Avoid Falling Into Default
Some of the main forces driving the national and state federal student loan default rates, said Kantrowitz, are unemployment rates and a borrower's debt-to-income ratio.
"Students who drop out of college are four times more likely to default on their student loans than students who graduate," he said.
Kantrowitz and Lanza both said that students at for-profit colleges are more likely to default on their student loans than students at not-for-profit institutions.
For students just beginning the borrowing process, Lanza said they should stop and think before signing on the dotted line.
"Obviously they should borrow only what they need," she said.
"So really think about what they're borrowing for and as much as they can try to limit borrowing up front so they don't have to repay it on the backend."
Lanza said that as much as students can, they should keep their future plans in mind when taking out student loans, and if they are already planning to attend graduate school, they should be more conservative in their borrowing for their undergraduate education.
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Comments:
Edward Saucier
3:53pm on Wednesday, October 10, 2012
"The government is going to get its money one way or another." OK!
Unfortunately us poor schmucks don't come under the "Too Big To Fail" umbrella. Economic inequality doesn't help either, not a lot of students were born with silver spoons in their mouths. The "greatest country in the world" doesn't give "free education" to their people like a lot of other nations do. There are a lot of things we don't do that other countries do. Which is why so many more countries are beginning to "not like us."
In his re-election campaign, Obama says he wants to cut the growth of college tuition in half over the next decade. That's a little late for students now. Of course the GOP won't go along with that unless we cut medicare or some other people program. Ever wonder why it takes the government so long to do something worth wild and it only takes a couple of days to decide we don't like some country and decide to bomb it?
Obviously we won't get free education in the USA because "that's socialism." The plan is to educate only those selected by the different cabals run by the elitists who want to keep the people stupid lest they interfere with their New World Order plans. An informed electorate scares the hell out of those sociopaths.
Obama wanted to stop the interest rate on student loans from doubling but the GOP wouldn't go along with that. Seems to me the only thing left to get things done right is to throw all the republicans out of office. Problem is, all the people in all the states have to do it at the same time. That's harder to do than, say, having a bunch of ragtag jerks hijack four planes in one day and fly two of them into two towers, another into part of the Pentagon while crashing the last one in a field. All while the military napped and the four pilots never activated the hijack alert button that is standard equipment in each plane.
The moral of the story is that if we don't wake up soon we're all going to wake up some day and think we're in Weimar Germany in 1933. Take my word for it, that won't be good.