The percentage of Missourians defaulting on their student loans is declining and remains well below the national average.
Recent figures released by the U.S. Department of Education show that Missouri’s three-year default rate dropped 0.5 percent, from 13.1 percent in 2010 to 12.6 percent in 2011.
The national student loan default rate also decreased – from 14.7 percent to 13.7 percent – during the same time period.
“We are pleased to see Missouri’s default rate on the decline,” said David Russell, Missouri commissioner of higher education. “Efforts to help students make smart financial decisions clearly are paying off.”
Russell pointed to the Missouri Department of Higher Education’s Default Prevention Grant Program as one way the department is working to reduce student loan default rates and promote choices that can help lead students to a more secure financial future.
The default prevention grants provide funding to higher education institutions for student-focused financial literacy programs.
“Missouri institutions are using these grants to educate student borrowers about the importance of minimizing their debt, following a budget and repaying their loans,” Russell said.
Nearly one quarter of the institutions participating in the grant program during 2011 had a default rate at or below 10 percent; more than 40 percent had a default rate below 15 percent.
The information released by the U.S. Department of Education reported default rates for borrowers whose first loan repayment came due between Oct. 1, 2010, and Sept. 30, 2011, and who defaulted on their loans before Sept. 30, 2013. Nationally, more than 4.7 million borrowers began student loan repayment during that time.
Missouri’s student loan default rate was lower than most surrounding states, including Arkansas (15.8 percent), Illinois (13.1 percent), Iowa (17.3 percent), Kentucky (17.5 percent) and Oklahoma (15.7 percent). Only two neighboring states posted lower default rates – Kansas (11.1 percent) and Nebraska (7.7 percent). Nearly 99,000 Missourians were repaying student loans during the reporting period. Just over 12,500 borrowers defaulted on their loans.
In addition to the Default Prevention Grant Program, the Missouri Department of Higher Education promotes financial literacy through publications and presentations for students and their families. For more information about the department’s programs, visit http://dhe.mo.gov/ppc/studentloans/financialliteracy.php.