Students are paying back college debts successfully at the University and at schools nationwide, according to U.S. Secretary of Education Richard W. Riley, who announced Tuesday that the national student loan default rate for fiscal year 1997 reached the lowest point ever recorded.
The default rate for FY 1997 was 8.8 percent, the lowest rate since the federal government first calculated the rate in FY 1987. The latest figures follow a seven-year trend of decreasing loan default rates. In FY 1990, the default rate peaked at 22.4 percent.
Riley has said he credits the improvement to a strong economy and a low unemployment rate. He also has attributed the falling rates to Congress's crackdown on loan defaults. Congress has increased collections of defaulted loans and has barred schools with the highest default rates from student loan programs.
Director of Financial Aid Yvonne Hubbard agreed that in addition to Congress' initiatives, the booming economy is helping students cope with their debts.
"Students are not just getting jobs, they're getting good jobs," Hubbard said.
The University's default rate was 2.6 percent for FY 1997 -- well below the nation's average, she said. The University also has seen a slight decrease in defaults from 2.7 percent in FY 1996.
The University has had a rate around 2.5 percent for several years, she added.
Although the University only accepts loans through the federal government, banks that provide student loans find the University's low default rate attractive, Hubbard said.
"We are constantly being solicited by banks because of the type of student who borrows here," she said.
Universities must either exclusively accept loans from the federal government or loans offered by banks.
At the Darden School, default rates are even lower. They do not even reach 1 percent, said Laurence G. Mueller, Darden School director of financial aid.
Mueller said the Darden School attributes the low percentage to the older ages of the average Darden student and the higher income levels reached upon graduation.
"Our average student is 28 years old," he said. "They generally have had quite a bit of work experience and are more accustomed to the time-sensitive nature of repayment."
Because Darden is a smaller school, the individual attention that students receive from the financial aid office also may contribute to the low rates, he added.
Other schools in Virginia also have default loan rates below the national average. William & Mary had a rate of 3.1 percent and Virginia Tech's rate was 3.6 percent, an increase of 0.5 percent from last year.
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