While the U.S. Department of Education announced on Monday that the default rate on student loans has risen in the past three years, officials said the number of Boston University students defaulting on their student loans has remained relatively low.
BU economics professor Kevin Lang said default rates on student loans at lead institutions including BU are considerably lower than those at less elite institutions.
“Default rates are very high at for-profit and less selective institutions, including people doing certificate programs and the like,” Lang said. “The default rate for the country as a whole is about a little over 10 percent. So, if you were to do the arithmetic, BU would not be typical [to the national average].”
According to the U.S. Department of Education release, the two-year national default rate rose from 9.1 percent to 10 percent, and the three-year default rate rose from 13.4 percent to 14.7 percent, demonstrating an overall rise in the amount of students unable to pay off their student loans over the past three years.
U.S. officials plan to address this rise in loan default by expanding efforts to educate and inform students that they have options when deciding what loans are right for them.
“The growing number of students who have defaulted on their federal student loans is troubling,” said U.S. Secretary of Education Arne Duncan in the release. “The department will continue to work with institutions and borrowers to ensure that student debt is affordable. We remain committed to building a shared partnership with states, local governments, institutions and students … to improve college affordability for millions of students and families.”
Lang said default rates on student loans have gone up in the past few years because tuition for higher education has generally risen. He said students are taking out larger loans, which require more payments and pose a greater challenge to graduates.
“These higher costs are not just higher costs relative to BU, but they’re higher costs relative to community colleges and the other institutions with which they are competing,” Lang said.
BU spokesman Colin Riley said although about half of all BU students take out federal loans, it is uncommon for BU graduates to default on their loans.
“BU students, by and large, understand and fully meet their payment obligations after graduation,” Riley said. “It reflects well on the education they receive here, and the students and the individuals who are making those repayments.”
Riley said the student loan default rate for BU students has been higher in years past than its current rate, and that the Financial Assistance Office has done a good job helping students manage their loans.
Ryan Beil, a School of Management sophomore, said the federal government should not allow the tuition rate to increase if they want the American youth to be educated.
“I would actually like to see some financial breakdown on it [BU tuition] to see where every single dollar is going,” Beil said. “Considering how high BU’s tuition is, I think it is surprising that more people haven’t gone bankrupt. Maybe BU just has a good system going … but they should increase financial aid with the increase in tuition rates.”
Jonathan Huang, a College of General Studies sophomore, said he is surprised that private institutions such as BU have a lower default rate because trade school tuition tends to be lower.
“If it is a trade school, they [the students] typically know more of what they are doing with job placement, so I would think there would probably be less unemployment [among students] for those schools,” Huang said.
Yaelle Nisinzweig, a School of Education senior, said considering the poor state of the economy, it is strange that BU’s default rate has remained low, while its tuition rate has risen.
“For such a gigantic school, our default rate doesn’t seem like a huge number,” Nisinzweig said. “It could have something to do with the people who are applying to BU in general … It seems like people who are able to find ways to afford college more are the ones who are going because they are the ones who are able to pay it back.”