Students at Illinois colleges and universities are less likely than those in other states to default on their student loans, according to a study by the U.S. Department of Education.
The study found that 9.4% of students at Illinois postsecondary schools who were scheduled to begin paying their loans in 2013 were in default by the third year of repayment. Illinois’ default rate was the 14th-lowest in the nation.
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 249 in Illinois, including private, public and proprietary(for-profit) schools. Among the largest in the state by enrollment, default rates were:
- College of Lake County: 11.8%.
- DeVry University: 10.6%.
- DePaul University: 3.3%.
- University of Illinois, Chicago: 2.8%.
- University of Illinois, Urbana-Champaign: 1.7%.
(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.
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.
Marion, Illinois, credit counselor: Beware for-profit schools; seek affordable options
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 Marion, Illinois-based Joy Gaddis, a certified credit counselor with 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?
Students and their families should beware of for-profit schools that charge high tuition and may make inflated promises about employment in the chosen field of study. They should also consider lower-cost options like community colleges and in-state universities, particularly when first starting out or if they’re not sure about selecting a major.
How does taking out student loans potentially affect students’ future financial lives?
Clients seeking student loan counseling from Clearpoint have an average of $85,000 in debt, up $10,000 in the past year. High debt loads among these clients play a major role in life decisions for many years due to the steep monthly financial obligation. This includes delays in major events like homeownership and starting a family.
What should parents and students keep in mind when taking out student loans?
Parents and students should remember that student debt is a serious obligation that they must repay. In most cases, student loans can’t be discharged in bankruptcy. Families should try to minimize the amount of debt they take on by carefully considering all education options, investing in 529 college savings plans early on, researching grants and using other methods, such as work-study programs, part-time employment and crowdsourcing among their friends and family.
Joy Gaddis is a certified credit counselor with Clearpoint Credit Counseling Solutions.
State student loan default ratesThe 50 states ranked from highest student loan default rate to lowest.
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