Rams & Rambelles are getting hit where it hurts

Graphic by:
Ngoc Tieu My Ta (Nelly)

LendEDU, an online resource for financial decisions, analyzes student loan default rates by school and state annually using data released by the Department of Education and released a report in November. The analysis finds ASU rants in the middle compared to other schools regarding student loan default rates. 

“Angelo State University's student loan default rate was 10.70%, which ranked 2,505 out of 4,398 colleges and universities across the nation from lowest to highest default rates,” said LendEDU Director of Communications Michael Brown.While ASU is in the higher half of student loan default rates across the nation, it falls in the lower half in Texas at 125 out of 260 schools. On average, Texas schools have a student loan default rate of 10.23%, a 0.52% increase from last year’s 10.18%.

The national default rate dropped this year, at 9.70% compared to last year’s 10.1%, but steadily increasing student loan debt remains an issue for many young Americans.The average borrower from the class of 2019 owes $29,076 in comparison to $28,565 in 2018. Each year, rising debt causes more and more borrowers to default on their loans.

A federal student loan defaults— or leaves repayment status and becomes due in full at the lender’s request—when the payment is 270 days late, but many private student loans default after only three or four months. Aside from debt collection agency calls, defaulting loans have a multitude of negative effects. Default activity shows up on a credit report for seven years and can significantly lower your credit score, which makes it harder to obtain a credit card and take out other loans for major purchases like cars and mortgages. Defaulting can also lead to loss of protections and benefits. Coupled with collection costs, the loss of benefits only makes loans harder, or for some borrowers, impossible to repay.

Arguably the most detrimental consequence of a loan default is students returning to school will not qualify for federal aid until the defaulted loan is paid off, which may lead to a complete inability to continue their education.

According to LendEDU, in order to avoid defaulting on student loans, borrowers should be proactive. If you are in danger of missing payments, contact your federal student loan servicer or private student loan lender depending on where you borrow to reach a compromise before the loan defaults.

 You may be allowed forbearance or a payment plan with smaller monthly payment. Taking these steps in advance is key because borrowers who default are rarely provided these benefits.

Refinancing loans is also an option that can lower interest rates and monthly payments. Again, refinancing should ideally be done before the loan is at risk of defaulting because better credit scores usually result in lower interest rates.