College Students Hopeful Despite Increasing Student Loan Default Rates


As thousands of college students prepare to graduate this spring, the impending
problem of repaying student loans is on everyone’s mind. With a weak national economy, high unemployment, and insurmountable interest rates, more students are defaulting
on their student loan payments than ever before.

According to numbers released by the Department of Education last September, 9.1 percent of the 4.1 million borrowers that began making payments between late 2009 and
early 2010 defaulted within two years, a figure that is up 8.8 percent from 2008.

Many students blame ignorance for their student loan debt.

“I wish student loans would have been better explained to me in high school,” said Ryan
Sterritt, 23, a senior at Kennesaw State University. “My counselor made it seem as if my parents didn’t have the money to pay out of pocket or I wasn’t below poverty level, student loans were the only option.”

Another student says she wishes loan officers would have walked her through the process
in more detail before she accepted her loan.

“I really wanted my loan officer to sit down and explain how student loans work.
Instead I was only told how much I owed Georgia State and to sign on the dotted
line so I could keep attending school,” said Alyssa Morris, 19, a sophomore at
Georgia State University.

Morris said her sister recently graduated with a degree from Georgia State and is
starting to pay back her student loans.

“Watching my sister struggle with her student loan payments is truly terrifying, because
I know I will be in the exact same position in two short years.”

In previous years, default rates rose because students at for-profit universities
were having trouble paying off their loans. The rise this year was because of students that attended more traditional nonprofit public and private universities. According to, 7.2 percent of the national student loan debt comes from students
at nonprofit public universities, while 4.6 percent comes from students from private universities.

Astronomical Loan Default Rates

For the first time, The Department of Education also released an official three-year
default rate which indicates that given another year of payments, the two-year 8.8 percent default rate reached an astronomical 13.4 percent in the third year.  The department is in the process of changing its standard to look only at the three-year rate, which will give a
more accurate depiction of true default rates.

Oftentimes, students are told that if a school is not a good fit for them and their
educational needs, they should transfer to one better suited for them. The process of transferring schools can result in loss of credits and add years to a student’s education.

“I went to a two-year school before transferring to a four-year university to finish up
my degree,” said Krista Green, 24, a recent transfer to Kennesaw State University from Georgia Highlands. “After I maxed out on my federal loans, I’ve had to take out private loans to pay for my education.”

Green, a fine arts major, also said she is incredibly worried as to how she will be able
to pay back her student loans.

“I’ve worked throughout school, but to focus more on academics, I have been putting
things on credit cards that I have already racked up several late payments on. I’m scared that I have gotten in over my head,” Green said.

Graduate School Delaying Loan Repayment

In an effort to put off their repayment of student loans, more students are going to
graduate school to kill time until the economy picks up.

“I sought out graduate school fellowships to avoid paying back student loans without accumulating anymore new debt,” said Zac Williams, a recent graduate of Bowling Green University’s master’s degree program.

Williams graduated with a master’s degree in sociology in May 2011 and relocated to
Atlanta in July 2011 to work for Georgia Power.

“I really lucked out on my job search. Now I’m beginning to make a slow dent in my
student loan debt.”

Non-traditional students have also become a more prevalent demographic in colleges and
universities nationwide.

“I started college in the ‘80s after graduating high school, but then quit to go to work and start a family,” said Steve Magill, now 49 and a recent graduate of American InterContinental University. “I worked in management for 20 years, but with the recent downturn of the economy, I knew I needed to get a degree to solidify my job and protect my family.”

According to the Federal Reserve Board of New York, 37 million Americans have outstanding student loan debt. As of the first quarter in 2012, the under 30 age group
leads in student loan debt with 14 million borrowers, closely followed by the 30-39 age group with 10.6 million. Perhaps the most interesting age group is the over 60 age group with 2.2 million borrowers still owing debt.

Parents Carry Debt Burden

In recent federal data, it was found that many parents are shouldering the burden
of their children’s student loan debt. Many parents felt comfortable taking on sizable loans to ease the financial stress of their children while in college, but some have fallen into difficult situations, whether it be due to health problems, job loss, or the recession.

“I feel incredibly fortunate my parents are in a position where they are able to help me out at least a little bit,” Sterritt said. “I hope that as I graduate and get into my career, I will be able to lift my student loan burden off of them and help my parents the way they helped me.”

As she looks forward to graduation in the spring, Green says she is hopeful about the future and the impending repayment of her loan is not going to hinder her excitement.

“Yeah, I have to pay back my student loan, but that isn’t going to stop me from being
excited about finishing my degree,” Green said. “Education is invaluable and a degree is really something to be proud of. It really comforts me to know that I’m not the only one in this financial situation and that one day, it will pass.”


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