UI alums paying debts


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As students across the country default on their student loans at an alarming rate, UI graduates seem to be committed to paying off their debts.

The national default rate on Stafford Loans reached 6.7 percent in 2007 — the most recent data available — while graduates from the UI default at a rate of only 2.1 percent, according to the UI Office of Financial Aid.

The news comes after the Project on Student Debt recently released a report showing Iowa students who graduated in 2008 had more debt than those in any other state with an average of $28,174 in loans. The only region with a higher average was Washington, D.C., whose students had $29,793 in debt on average.

And while the economy in Iowa has not suffered as much as that in other states, Mark Warner, the director of the UI Student Financial Aid Office, said the reason that UI students make the payments has more to do with their level of education than it does the job market.

Warner said he didn’t know why UI graduates are not defaulting on loans as much as their peers but suggested it was how the university prepared them for postgraduation life.

“When they graduate, they are able to secure jobs and jobs at salaries that allow them to pay back their loans,” he said.

UI alumni who graduated in May had an average debt of $22,684, with 39 percent obtaining no debt.

Warner noted the UI’s average debt among graduates is the lowest among the three regent institutions.

With relatively low tuition rates — the UI’s is among the lowest compared with its peer institutions — some officials said they were confused on why Iowa students have so much debt.

“It seems a little inconsistent that the debt levels are so high,” said Regent Jack Evans.

The regents are studying the subject, he said, but they could not give any specific reason for the disproportion.

Warner said nearly half of the more than 20,000 undergraduate students in the fall 2008 semester took out a Stafford Loan. The money borrowed topped $67 million, with the average loan equaling $6,607.

While officials wish the default rate among UI graduates was 0 percent, they said, they’re glad it’s lower than most universities.

Defaulting on a loan can have significant consequences on a people’s credit rating, said Marc Davis, the supervisor of student loans in the University Billing Office.

“That’s something they should be really concerned about,” he said. “That’s why it’s important for students to stay on top of what their loans are and who holds them.”

Davis said students can find a report of their financial aid on the ISIS website, and they should check to make sure they always know where their financial aid is coming from.

“In the long run, the better job they do in knowing the source of their financial aid the better off they will be,” Davis said.

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