More college students are repaying federal student loans, theEducation Department announced Tuesday.
And Ball State is beating the trend.
The default rate for Ball State students during the 2001 fiscalyear was 4.3 percent. Nationwide, 5.4 percent of graduatesdefaulted on their debt.
"BSU has had a very low default rate for the last 10 years,"said John Starnes, associate director of scholarships and financialaid. "I've worked in the financial aid office (for years), andwe've never had a default problem."
The drop in defaults can be attributed to many factors,including improved credit counseling and flexible repaymentschedules.
Even though tuition rates keep climbing, interest rates areprogressively declining and making it easier for students to repaytheir debts.
Starnes also credits Ball State's success rate to the school'salumni.
"It's the type of students we have," Starnes said. "Most comefrom middle-class families that pay debts."
Robert Zellers, director of scholarships and financial aid, saidthe Midwestern work ethic also leads to low default rates.
"Folks in the Midwest are good, hard-working people that paytheir bills," Zellers said.
While Tuesday's announcement is good news for college students,students' college debt can lead to long-term financialproblems.
A Cambridge Consumer Credit Index survey earlier this monthfound that outstanding college debt from using loans to pay forcars, apartments or other expenditures impeded 68 percent ofgraduates from buying homes, cars or other major purchases.
The federal maximum loan amount is $23,000 for dependents and$46,000 for independents, Starnes said. Students will findthemselves in debt when they take out the maximum-allowable loan,even if they don't need that much money, Starnes said.
"When you think about all the clothes one wants or the car onewants, everyone thinks, 'Buy now. Pay later,'" said SrinivasanSundaram, an associate professor in the department of finance andinsurance. "But it needs to be 'Buy now. Afford now.'
"My contention is that as a student, education comes first, andclothes and cars need to wait."
To help combat this attitude, Ball State offers loan counselingadvice to borrowers, Zellers said.
"We try to make sure they understand these things," Zellerssaid.
During the past two to three years, Zellers said, students havebeen borrowing more money. Today, a graduating senior walks awaywith an average amount of $16,000 in debt, Zellers said.
The key is to watch spending and borrowing habits, Zellerssaid.
"Students will have to exercise a great deal of self control,"he said. Nationally, the Cambridge Consumer Index also found that22 percent of Americans have student loan debt, an increase overlast year's 18 percent. Additionally, because of this debt, 55percent of college graduates are having difficulty meeting theirfinancial goals, according to a poll conducted by HarrisInteractive for Collegiate Funding Services.
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