Department of Higher Education

State financial literacy programs promote importance of loan repayment

According to the U.S. Department of Education, the state’s three-year loan default rate decreased six-tenths of a percent, putting Missouri’s rate below the national average and lower than most of its neighboring states.

Missouri’s student loan default rate dropped from 10.9 percent to 10.3 percent. The national rate decreased from 11.5 percent to 10.8 percent.

Over 101,000 Missourians were repaying student loans during the reporting period.

“We are very pleased to see this trend in declining default rates in Missouri,” said Zora Mulligan, Missouri commissioner of higher education. “This is a sign that efforts being made by our state’s colleges and universities to help students make smart financial decisions are paying off.”

For the past 17 years, the Missouri Department of Higher Education’s Default Prevention Grant Program, provided funding and training to higher education institutions for student-focused financial literacy programs. The grant ended in June of 2018, but the impact of those efforts will continue to be seen due to the timing of default rate reporting.

“Our focus on reducing student loan default rates goes on,” said Mulligan, “We are promoting sound financial choices through a peer counseling pilot project at open enrollment institutions, targeted research into the impact of student debt on college graduates, and we are planning a multifaceted communication campaign.”

The U.S. Department of Education figures are based on default rates for borrowers whose first loan repayment came due between Oct. 1, 2014, and Sept. 30, 2015, and who defaulted on their loans before Sept. 30, 2017. Nationally, more than 5 million borrowers began student loan repayment during that time.

Default rates in neighboring states were:  Arkansas, 11.2 percent; Illinois, 10.2 percent; Iowa, 11.6 percent; Kansas, 12 percent; Kentucky, 14.3 percent; Nebraska, 7.9 percent; Oklahoma, 12.1 percent; and Tennessee, 11.1 percent.

The Department of Higher Education promotes financial literacy through publications and school presentations for students and their families. For more information about the department’s programs, visit https://dhe.mo.gov/ppc/.