October 28, 2013
RI student loan default rate hits 12.8%; second-worst in New England
PROVIDENCE, R.I. (WPRI) – Rhode Island has the second-highest student loan default rate in New England, but remains well-below the national default rate of 14.7%, according to data released Monday by the U.S. Department of Education.
Rhode Island’s three-year federal loan default rate for those who entered repayment during the 2010 fiscal year was 12.8%, a 1.6 percentage point increase from the previous year, when colleges first began reporting their three-year rates. In all, 2,614 former students at public or private colleges in the state defaulted during that time span.
“The growing number of students who have defaulted on their federal student loans is troubling,” U.S. Secretary of Education Arne Duncan said in a prepared statement. “The department will continue to work with institutions and borrowers to ensure that student debt is affordable.”
Among New England states, Rhode Island trailed only Maine, which posted a 13.1% default rate since 2010. Vermont posted the lowest rate in the region, with just 7.2% of students entering default. Massachusetts posted an 8.5% rate while Connecticut saw 11.7% of its former students default on their federal loans within three years of entering repayment.
By comparison, Arizona’s 23.2% default rate was far and away the highest in the country while North Dakota (6%) posted the nation’s lowest figures.
Despite a slight uptick, Brown University (2%) had the lowest default rate among the state’s individual colleges, beating out Providence College by two-tenths of a percentage point. The Lincoln Technical Institute, a proprietary school, posted a 32.6% default rate – by far the highest in Rhode Island.
All three of the state’s public colleges saw their three-year default rates increase, with the Community College of Rhode Island (14.7%) posting the highest figures. The University of Rhode Island had a 6.9% default while Rhode Island College increased slightly to 9%. RIC President Nancy Carriuolo told WPRI.com the college is committed to working with state officials to keep tuition affordable.
"Rhode Island College continues to strive to ensure that our students are provided a quality education at a cost that is affordable,” Carriuolo said. “The majority of our students are Rhode Island residents, many the first in their family to attend college; and our graduates overwhelmingly choose to stay in Rhode Island, where they remain active and engaged citizens."
For the majority of federal loans, a failure to make a payment in more than 270 days triggers a default, according to the U.S. Department of Education. Nationwide more than 600,000 people have defaulted on their student loans since entering repayment in 2010, a figure advocates say only begins to shed light on the nation’s student loan debt woes.
“Even at schools where lots of students borrow, cohort default rates don’t tell you how many students are behind on payments, overloaded with debt, or defaulting after more than three years,” Debbie Cochrane, research director for The Institute For College Access and Success in Washington D.C., said in a statement.
Colleges across the country are facing increased pressure to curb default rates from the Obama administration, which has introduced a plan to begin grading schools based on affordability and performance and penalize schools who fail to improve with cuts in federal aid.
Separate from the Obama proposal, an already-existing federal law strips aid for colleges with default rates of 30% or higher in three consecutive years or 40% in any single year. In Rhode Island, Lincoln Tech is the only college at risk of losing federal aid if its default rate exceeds 30% again next year.
A message left at the college’s New Jersey headquarters was not immediately returned.
Although much of the blame for the nation’s default rates has fallen on colleges, Cristiana Quinn, who heads up a college advising firm in Providence, said families need to do a better job during the college selection process. She said public information on college costs and default rates is “all available in a myriad of sources, including www.collegedata.com and www.collegeboard.com.”
“Sadly, what I often see is that families get attached to colleges emotionally, and then consider the debt implications once acceptances and financial aid letters come out,” Quinn told WPRI.com.
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