Interactive: Student Loan Default Rates
College is an investment in yourself. Students should approach their college decision with a healthy amount of skepticism. Admissions and college marketing material present colleges in their best possible light, it’s up to students to play the role of a devil’s advocate to avoid getting too wrapped up in the emotion of the process. Looking at a college's student loan default rate provides a window into the number of students struggling to repay the debt they incurred at the college. A high loan default rate may serve as a warning sign indicating that a large number of students are struggling to earn sufficient income from the degree that they earned to repay their student loan OR it could signal that students are taking on excessive amounts of debt due to a combination of high cost of attendance and a lack of financial aid offered by the school.
A student loan is considered to be in default if a payment hasn't been made in 270 days (about 9 months). A school's student loan default rate is calculated based on the number of borrowers who default in the two following years after they first enter loan repayment. Once a federal student loan goes into default, consequences for borrowers include:
- Wages may be garnished without a court order
- They can lose out on your tax refund or Social Security check (funds would be applied toward your defaulted student loan)
- Credit reporting agencies will be notified, and their credit score will likely suffer a significant hit.
This Interactive allows students to explore the student loan default rates at colleges in a selected state. It could serve as an excellent hook for a Paying for College unit lesson. Students can simply select a state, hover over the data on the state map, and compare colleges to the average default rate for the state selected.
Here are a few questions you can ask your students after they engage with the Interactive:
- What can you learn by exploring and comparing student loan default rate averages by graduates of colleges in your state and other states?
- What is the range of student loan default rates in the colleges in your state?
- What are a couple of colleges with graduates who have student loan default rates well below the state averages? What does that tell you about those colleges?
- What colleges with graduates have student loan default rates well above the state averages? What does that tell you about those colleges?
If you are interested in having students dive deeper into uncovering the cost of college, consider using our INTERACTIVE: How Much Will Your College Actually Cost?
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