The U.S. Department of Education released the college student loans default rates Sept. 25, and New Mexico State University’s systemwide three-year default rate is about 20 percent, showing a slight increase from last year.
“We are taking steps to address our default rate, but there is a three-year time lag between our actions and when we can hope to see any effect,” said Bernadette Montoya, vice president for student affairs and enrollment management. “Nonetheless, this issue has our full attention. We want students to understand the responsibility they take on when they receive a loan.”
Defaulting on student loans is much more common for students who attended college, but do not graduate. NMSU graduates had a default rate of 6 percent for the 2010 three-year cohort rate, which is only a third of the rate for the institution in general. Last year, the national default rate increased from 13.4 percent to 14.7 percent.
NMSU’s rate includes students from all the NMSU campuses including Alamogordo, Carlsbad, Grants and Dona Ana.
After students leave higher education institutions, they are given a six-month grace period to begin repayment and 270 days after that before they are considered in default. NMSU is working to improve its default rate through intervention programs focused on student financial education.
NMSU hired a financial aid outreach adviser in spring 2014. Claire Cortner Montoya works with student groups such as freshmen and students who withdraw after only earning a few credits. These groups typically have the highest default rates. She is coordinating programs to help students with lottery scholarship retention, financial literacy education, and completing a Free Application for Student Financial Aid (FASFA).
Since fall 2012, NMSU has partnered with the nonprofit organization Inceptia, a division of the National Student Loan Program. The company focuses on student loan repayment counseling, financial literacy education and default management. Many students don’t know that they might qualify for income-based repayment plans or an extended grace period.
Also at NMSU, starting in fall 2013, freshmen borrowers were given an extra 30 days to finalize their loans, which gave them the opportunity to determine if they needed the entire loan amount that was allotted to them. NMSU requires students to attend loan counseling every year, while the federal government mandates only one session.
Information from NMSU