Even so, it’s the second year in a row Livingstone’s default rate has remained above 25 percent. Livingstone officials say the Department of Education’s figures are inaccurate. The rate has actually decreased, said State Alexander, spokesman for the college, “so, Livingstone is not in jeopardy of losing anything, and there will be no sanctions at this point.”

Schools with default rates of 25 percent or more for three consecutive years can lose their eligibility for obtaining loans and Pell grants for their students.

According to federal reports, Livingstone has held default rates of more than 25 percent for the 1996 and now 1997 fiscal years (25.8 and 26.3, respectively).

At Livingstone, students now meet with a default manager during orientations. Students go through workshops to understand the ramifications of defaulting.

Nationally, the rate fell to 8.8 percent for fiscal year 1997, the lowest point since the federal government started calculating the rate. It’s the second year the rate has dropped below 10 percent. In fiscal year 1990, students hit an all time high for defaulting on their loans at 22.4 percent.

Here at home:

• Livingstone leads with the highest number of student defaults at 71. Although Livingstone’s percentage increased, the actual numbers of students who defaulted decreased from 81 to 71. The percentage increased from 25.8 to 26.3.
  
• Twenty-four students at Pfeiffer University defaulted, an 8.6 percent default rate. That represents the third year Pfeiffer’s default rate has increased, beginning with 4.4 percent in fiscal year 1995. In actual numbers, Pfeiffer has reported 11 students defaulting in fiscal 1995, 20 in 1996 and 24 last year.

“Pfeiffer University puts a lot of emphasis on educating students about financial aid and their obligations to pay off their loans when they graduate,” said Matt Marvin, public relations director. “An emphasis is placed on telling students that they need to plan their future budgets to include repayment of educational loans. It is an emphasis of Pfeiffer University to work on this number and to keep the numbers moving down rather than up whenever possible.”

• Eleven Catawba College students defaulted on loans, presenting 5 percent. In 1995, Catawba reported one student default, representing a .7 percent default rate, and 10 defaults in 1996, a 4.8 percent default rate.

At Catawba, financial aid office members counsel students there, as required by federal law. “We work very hard to make sure our students don’t go into default,” said Judy Carter, director of financial aid. “We counsel them so they understand about default. They fully understand what’s required of them as they complete their schooling and begin the repayment process.”

• No students defaulted on federally-backed loans at Rowan-Cabarrus Community College in fiscal year 1995-97.

“The reason we look so good is because we do discourage people from taking loans, and we encourage them to go these other routes,” said Dr. Richard Brownell, Rowan-Cabarrus president. “These lists of default rates are meaningless. They don’t take into consideration the number of people who have student loans. We work very hard to not have a lot of loans.”

Brownell said the public doesn’t realize colleges have no control over whether a student defaults. And when a student transfers into a school, that college inherits their loan.

If four students have a loan, and one defaults, then the college has a 25 percent default rate, Brownell said.

The ability of students to pay also has a direct correlation with a students socioeconomic status. “If they’re more disadvantaged, then they have more difficulty,” Brownell said.

Total loan volume has more than tripled in the last decade. In fiscal year 1997, students took out 8.4 million loans worth $34.1 billion (9 million loans worth $42.9 billion in fiscal year 1999), up from 4.1 million loans worth $11.7 billion in fiscal year 1990.

In fiscal year 1999, more than $1 billion will be collected through federal offsets, a 66 percent increase over collections the previous year; $1 billion will be collected through other collection tools, and another $1 billion in defaulted student loans will be consolidated by guaranty agencies or the department.

This year, 42 schools are faced with loss of loan eligibility under this provision and 11 of these schools may also lose Pell grant eligibility. The other 31 schools either withdrew or were removed from the loan programs prior to the 1998 law taking effect and, thus, remain eligible to administer grants. In addition, under department regulations, schools with a one-year default rate over 40 percent may have their eligibility for all federal student aid programs restricted or terminated. Based on the Fiscal year 1997 rates, 13 schools fall in this category. The total number of schools subject to one or both sanctions is 49.

Borrowers who default on federal student loans face serious repercussions, such as the withholding of federal income tax refunds and other federal payments, wage garnishment, adverse credit bureau reports, and denial of further federal student aid.

To avoid these sanctions, defaulters have the option of consolidating their loans and establishing an income-based repayment plan that matches their ability to pay.