Georgia Students Default More Than US Average on Student Loans

Loans, Student Loans
georgia-students-default-u-s-average-student-loans

Students at Georgia colleges and universities are defaulting on their student loans at a higher rate than the national average, according to a study by the U.S. Department of Education.

The study found that 12% of students at Georgia postsecondary schools who were scheduled to begin paying their loans in 2013 were in default by the third year of repayment.

The overall U.S. default rate was 11.3%. (See the default rates for all 50 states.)

The study looked at more than 6,000 postsecondary schools in the nation and 145 in Georgia, including private, public and proprietary (for-profit) schools. Among the largest in the state by enrollment, default rates were:

  • Georgia State: 8.8%.
  • Kennesaw State University: 7.3%.
  • Georgia Southern University: 6.8%.
  • University of Georgia: 2.2%%.
  • Georgia Tech: 2%.

(Click here to search the federal database for default statistics by school, city or state.)

Nationwide, public community colleges had an average default rate for 2013 of 18.5%, and proprietary schools were at 15%. For four-year public colleges, the average rate was 7.3%, and for four-year private colleges it was 6.5%.

The default rates for community colleges, vocational schools and for-profit colleges tend to be higher because former students are less likely to have completed their studies or see a boost in earnings, and often can’t keep up with loan payments, according to a report in the Brookings Papers on Economic Activity.

In Georgia, for example, Wiregrass Georgia Technical College had a default rate of 32.3%, and Georgia Northwestern Technical College was at 27.8%, according to the report.

 

>> MORE: Student loan default: What it means and how to deal with it

The new report provides a detailed look at default rates, but it may not show a complete picture of the debt burden on students. While the report takes a snapshot of borrowers who are within the first three-year window of their repayment phase, it doesn’t capture those who delay repayment until after the three-year measurement window expires.

Atlanta credit counselor: Treat student debt with ‘extreme caution’

People with college degrees earn more, on average, than those with only a high school diploma. In 2014, the median income of young adults with a bachelor’s degree was $49,900, compared with $30,000 for people who completed high school, according to the National Center for Education Statistics.

However, excessive student loan debt is a major burden for many Americans. It can significantly hamper borrowers’ finances by increasing their overall debt burden and cutting into money they could use for mortgages, retirement and other long-term investments. Total student loan debt was $1.36 trillion as of June, according to the Federal Reserve Board, up from $961 billion in 2011.

We asked Thomas Nitzsche of Atlanta-based Clearpoint Credit Counseling Solutions about how families can integrate student loans into their financial lives.

How can students and families make sure their loans are a good investment in their future?

To ensure that student loans are a good investment in the future, start with the right foundation. This simply means researching careers that are needed in the marketplace now and most likely in the future. It makes no sense to take out student loans for education in a field that’s becoming obsolete or has more supply than demand.

How does taking out student loans potentially affect students’ future financial lives?

Student loans can be a severe financial hindrance, especially if the loan amounts are high. Student loans can limit your ability to borrow money to buy a home or car. In addition, employment opportunities are competitive and scarce. If you have trouble finding a job, you’re at risk of not being able to make the monthly payment to fulfill the debt.

What should parents and students keep in mind when taking out student loans?

Both students and parents should understand that student loans are debts that cannot be dismissed. Use extreme caution when taking out student debt. Parents and student borrowers often rush into the idea of higher education without realizing the cost or the opportunities for employment, or without understanding that we live in a completely different financial market. The old notions of a college education guaranteeing a good job are not always the case.

What options exist to improve the terms of student loan debt?

The income-based Revised Pay As You Earn program, which was launched late last year, is a good start. Since the government owns 90% of all student loans, there are a number of income-based options.

What should families do if they find they can’t make payments?

If you find yourself unable to pay, reach out to your loan servicer immediately to explain the situation and see what options are available, such as forbearance or deferment. For government-backed loans, you may have the option of paying zero if you have no or limited employment. Even some private loan servicers have deferment options now. The most important things are to communicate and to offer at least something, even if it’s less than the monthly required payment.

Are income-driven repayment plans a good option? What should borrowers know about that?

Income-driven payment options are fantastic. They ease the burden of having to pay what normally would be required for large amounts of student debt. However, borrowers need to be aware of the interest and tax consequences that come along with these restructured loans.

Thomas Nitzsche is the media relations manager of Clearpoint Credit Counseling Solutions.

State student loan default rates

The 50 states ranked from highest student loan default rate to lowest.
RankingState Percent defaulting on student loans
1.New Mexico18.9
2.





West Virginia16.2
3.Kentucky15.5
4.Mississippi14.6
5.Indiana14.2
6.Florida14.1
7.Arkansas14
8.Arizona14
9.Wyoming14
10.Oregon13.7
11.Ohio13.6
12.South Carolina13.2
13.Nevada12.7
14.Texas12.6
15.Oklahoma12.5
16.South Dakota12.3
17.Louisiana12.3
18.Alabama12.2
19.Georgia12
20.Iowa11.9
21.Michigan11.8
22.North Carolina11.6
23.Alaska11.6
24.Colorado11.5
25.Missouri11.5
26.Tennessee11.4
27.Idaho11
28.Kansas10.7
29.Washington10.4
30.California10.4
31.Hawaii10.4
32.Maine10.4
33.Delaware10
34.Maryland9.9
35.Montana9.8
36.Wisconsin9.6
37.Illinois9.4
38.Pennsylvania9.2
39.Virginia9.1
40.Utah9.1
41.New Jersey9
42.Minnesota8.8
43.Connecticut8.5
44.Nebraska8.2
45.New York8
46.Rhode Island7.9
47.New Hampshire7.8
48.Vermont7.2
49.North Dakota6.5
50.Massachusetts6.1