Department of Higher Education
October 01, 2015Student loan default declines, Missouri's rate remains below national average
The percentage of Missourians defaulting on their student loans continues to decline, keeping the state’s default rate below the national average.
Figures released this week by the U.S. Department of Education show that Missouri’s three-year default rate dropped 1.3 percent, from 12.6 percent in 2011 to 11.3 percent in 2012.
The national student loan default rate also saw a significant decrease – from 13.7 percent to 11.8 percent – during the same time period.
“The continuing decline in default rates is good news for students, colleges and Missouri,” said David Russell, Missouri commissioner of higher education. “The trend tells us that concerted efforts to help students make smart financial decisions are paying off both locally and nationwide.”
The state’s Default Prevention Grant Program, which is an initiative of the Missouri Department of Higher Education, focuses on reducing student loan default rates by promoting smart choices that can help lead students to a more secure financial future.
The default prevention grants provide funding and training to higher education institutions for student-focused financial literacy programs. Thirty schools were awarded grants totaling $825,000 for the 2015-2016 school year.
“Missouri institutions are using these grants to educate student borrowers about the importance of minimizing their debt, following a spending plan and repaying their loans,” Russell said.
More than 40 percent of the higher education institutions participating in the grant program during 2012 had a default rate below 10 percent. The previous year, less than 25 percent of institutions had a default rate less than 10 percent.
The U.S. Department of Education reported default rates for borrowers whose first loan repayment came due between Oct. 1, 2011, and Sept. 30, 2012, and who defaulted on their loans before Sept. 30, 2014. Nationally, more than 5.1 million borrowers began student loan repayment during that time.
Missouri’s student loan default rate was substantially lower than several surrounding states, including Arkansas (14.5 percent), Iowa (13.1 percent), Kentucky (16.3 percent) and Oklahoma (13.7 percent). More than 105,000 Missourians were repaying student loans during the reporting period. Just over 12,000 borrowers defaulted on their loans.
In addition to the Default Prevention Grant Program, MDHE promotes financial literacy through publications and school presentations for students and their families. For more information about the department’s programs, visit dhe.mo.gov/ppc/studentloans/financialliteracy.php.