ULV loan default rate above national average

by Katrina Hall
Staff Writer

The University of La Verne has the highest loan default for graduate students among local four-year schools with a 11.2 percent default ratio.

The U.S. Department of Education reports that the national average is 10.4 percent.

This percentage shows the number of borrowers nationwide who missed loan payments for at least six months in 1995.

The ULV percentage of loan default has dropped for the third consecutive year.

“Our trend is going incremendously down and that is positive,” said Bob Peters, director of financial aid.

With ULV being an independent university and the cost of tuition currently at $15,100 a year, students actually need more money than what they are allowed.

“The loans are limited to the average budget that a school develops,” said Peters. “But there are going to be students who will borrow money because it is there. We do not have any mechanisms to say, ‘How are you using this money?'”

Before the loan entrance and exit interviews established eight years ago that is now a federal requirement, students were taking out loans and were not aware of having to pay it back with the interest. Now if a student wants a loan but does not attend an entrance interview, they will not be approved for a subsidized or unsubsidized Stafford Loan or a parent loan.

“They made entrance and exit interviews to let people know what they are getting in to,” said Peters. “Now our students are taking it seriously.”

ULV has the option of requiring an entrance interview annually.

Garnishing wages and income-tax refunds and filing for lawsuits against student defaulters are what the U.S. Department of Education is doing to retrieve the lost money owed to them.

What some student defaulters fail to realize is that a school can be dropped from student loans and other aid programs if the default rate becomes excessive.

“We are in no harm of being dropped,” said Peters. If we reach the rate of 15 percent, then we are at risk.”

Any school that goes over 25 percent on default rate will be dropped from the program.

Two hundred sixty-nine institutions in the United States either lost their federal aid eligibility or were put on probation for having excessive default rates over 15 percent over a three year period or over 40 percent for one year.

According to the ASAP $IHELP Union Bank and Trust Company, deferment can be extended for any graduate student who has trouble paying back their loans. The deferment allows the graduate student to hold off paying back their loan until they are stable enough to afford it. But they must ask for deferment before their loans are outstanding.

The types of deferment include economic hardship, family, in-school, education related, public service, temporary or permanent disability.

Another route to take is loan consolidation. The defaulter is able to combine all their loans into a single loan with a single payment payable to a single holder each month. It is considered to be a lot easier though the interest rate is based upon the weighted average of the underlying loans rounded to the next whole percent. It is then fixed for the entire payment period up to 30 years though it may significantly increase the total amount the borrower repays to the lender.

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