By
Shana Heiser
Arizona Daily Wildcat
UA rate 4 percent, national rate decreases to 7 percent
The University of Arizona's student loan default rate of four percent is lower than the lowest-ever national rate, about seven percent.
The default rate at UA has decreased nearly three percent in two years, which parallels the nationally decreasing rate, which is down from 24.4 percent eight years ago.
"Our students are tending to business," said John Nametz, UA's director of need-based financial aid.
A loan is considered defaulted when it isn't repaid on time.
The loan default rate has decreased because the economy is good and people are working and able to pay off their loans, said Jane Glickman, spokeswoman for the Department of Education.
"We've been aggressive in using the collection tools to collect loans and make sure borrowers know their responsibilities," she said.
Lenders offer reduced interest rates to students at universities with rates lower than the national average, said Pam Fields, Bank One customer relations representative.
"Any school with a lower default rate will get extra benefits," she said. "(UA) does offer the two-percent interest reduction after the first 48 payments."
The average loan default rate for four-year public universities is 5.7 percent, Glickman said. The higher national loan default rate of 6.9 percent includes all proprietary schools, community colleges, four-year public and private colleges, but Glickman still commended the UA.
"That's excellent," she said. "Your students must be taking their responsibilities seriously and doing well in the job market when they get out (of UA)."
The UA's effort to make low interest rate deals with lenders has also given students an extra bonus.
Instead of the Department of Education's set interest rate of 8.19 percent, Nametz said UA students can get a 1.25 percent discount on their loans.
"On a $10,000 loan, that's almost $800 over the life of the loan of discount," he said.
Nametz attributes the decreased loan defaulting to the increase in preparedness during high school, including challenges such as advanced placement courses and test scores.
"The people who are most likely to default on loans are those who are not persisting in school," Nametz said. "The more prepared students are, the less likely they are to drop out."
Even when the national loan default rate was at 24.4 percent, UA's rate remained low, between six and seven percent, said Nametz, until last year's drop of more than two percent.
"We were pretty much constant for about eight years," he said. "We went down maybe a half percent until this last year. This is a real a precipitous drop, which in this direction, we love to see."
Arizona State University's loan default rate is at 5.7 percent and Northern Arizona University is about seven percent, Nametz said.
UA students follow the advice of lenders and financial aid advisers, bringing the rate down, he added.
"We can honestly tell our students it's a very simple message - don't lose your discounts and benefits," Nametz said. "Keep in contact with your lender."
Student debt at UA is on the decline, which Nametz said he is pleased to see, but undergraduates are still an average of $17,143 in the red when they graduate.
"I'm uncomfortable with a society that allows our students to enter the job market with that kind of debt," Nametz said.
The loan default rate has been falling for eight years, but realistically, there will always be some loans, said Glickman.
"This is a very low, low rate and we expect it to continue," Glickman said.
