Page 26 - The Woods Magazine - Summer 2012

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o o d s
There are several advantages to using an
IBR, as well as other repayment plan options.
Check them out at
Deana Ready
, director of student financial
services at WWU, suggests that the best
way to keep from defaulting is to be
knowledgeable about your loans and be
aware of how much you are borrowing.
“It may be tempting to borrow more
loan money than you need for your expenses.
Refund checks may seem like a good thing
when you receive them, but you must
remember that you are borrowing money
and that you will be required to pay it back,”
explained Ready.
The default rate on student loans doesn’t
affect just students. Higher education
institutions whose default rates exceed
40 percent in one year, or 25 percent for
three consecutive years will lose their
eligibility for federal student aid programs.
One recommended route is for students
to begin paying on their loans (or at least
the interest they accrue) while they’re still
in school.
The Missouri Department of Higher
Education (MDHE) provides free financial
counseling to borrowers. Marilyn Landrum,
MDHE supervisor of default prevention and
financial literacy, offers this advice:
“Request a one-on-one meeting with your
financial aid officer for your exit counseling
session to go over the repayment plans and
find out what to do if you find you’re having
trouble making your payments.”
At WWU, teaching students about financial
responsibility is a community effort. The
university utilizes its innovative LEAD
(Leading, Educating, Achieving and
Developing) program, combined with the
efforts of the student financial services office,
the student life office, and the residential life
office to teach students about their finances,
encourage budgeting, and increase
student responsibility.
Many borrowers fail to realize the
life-altering consequences of defaulting on
their student loans. Defaulting more often
than not leads to having their federal or state
tax returns seized, or having their
wages garnished.
It also affects any other type of loan they
try to get, resulting in higher interest rates and
denial of a loan in some cases. Defaulting on
a loan can also mean not getting approved for
a home mortgage or apartment lease, and
difficulty finding a job.
National student loan
default rates rise, while
WWU’s stays low
By Erin Crooks ’12
William Woods University students are paying
their loans. While the national student loan
default rate is close to 9 percent, WWU’s is
below 2 percent.
The national student loan default rates
have been steadily increasing since 2003.
Those rates rose from 7 percent in 2008 to
8.8 percent in 2009, while Missouri’s overall
rate increased from 5.8 percent to 7.6 percent.
By comparison, WWU’s student loan default
rate is 1.6 percent.
These percentage rates are based on
borrowers whose first payments came due
between Oct. 1, 2008, and Sept. 30, 2009,
and who defaulted before Sept. 30, 2010.
One obvious reason for the increase
in student loan default rates is lack of
employment, specifically for those
graduating from college with loans to repay.
With no money coming in and the cost
of living on the rise, it must seem to new
graduates that they have no choice but to
default on their student loans. However,
there are numerous options for these students.
One of the most beneficial is the Income-
Based Repayment plan, known as an IBR,
which allows borrowers to pay back a
percentage of their disposable income.
When you put financial knowledge with
personal responsibility you create a win-win
situation for everyone. Students have the
knowledge that as a responsible citizen, it
is their responsibility to pay back what they
borrowed – and they do. -Deana Ready