Student loan default rate up in Missouri

The statewide default rate for student loans is up significantly from last year, according to the latest numbers from the Missouri Department of Higher Education.

The Missouri default rate is 6.09 percent, up from 4.3 percent last year. The rate tracks borrowers with loans originated between Oct. 1, 2006, and Sept. 30, 2007, who defaulted before Sept. 30, 2008. Statewide, 4,617 borrowers from 160 schools fall into that category.

The national default rate over the same period rose to 6.7 percent from 5.2 percent.

DHE officials, who attribute the increase to the down economy, say that despite the high default rate, the large majority of borrowers remain on time with their payments.

"In 1990, the national default rate was over 20 percent," Missouri Department of Higher Education Assistant Commissioner Leanne Cardwell said in a news release, "so by comparison, the current rate is low and reflects an increased focus on default prevention efforts."

Among those efforts, according to the department, is a grant program started in 2001 for schools seeking to reduce their loan default rates. The department has given out more than $4.2 million to 32 colleges and universities, which use the money to teach students about money management.

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