Laura Fitzgerald, The Miami Student
Paying back student loans is a common concern for many Miami University students, but for some, the prospect of defaulting becomes a reality.
Defaulting is when a graduate is unable to pay back their student loans. Director of Student Financial Assistance Brent Shock said a graduate goes into default if they fail to make a payment on their loan after 270 to 360 days.
The consequences of defaulting are severe. For example, the graduate's credit rates may fall, which will affect their ability to apply for a loan on a house or car.
And, according to a report from the U.S. Department of Education, Miami is the most expensive public school in the nation (based on net prices, or tuition without consideration of scholarships and financial aid), so repaying student loans from a Miami education is even more burdensome than it would be at institutions.
Still, Shock said that is part of the risk when students agree to take out a loan.
"It's your debt, you're gonna have to pay for it," he said.
The graduate will also lose federal aid eligibility forever. It may affect their wages and taxes, and currently student debt is unforgivable in a bankruptcy situation, Shock said.
This may change, however, because the White House is currently considering a measure that would make student loans from private lenders forgivable in bankruptcy. In order for that to happen, though, the bill must first make it past Congress.
Miami's student default rate is approximately 14.4 percent, just above the national average of 13.7 percent. These numbers are calculated from those entering payment between Oct.1, 2010, and Sept 30, 2011, and defaulted by Sept 30, 2013.
The student default rate includes both Oxford and all branch campuses. At about 24 percent, the default rate for the Middletown and Hamilton campuses is much higher than Oxford's rate, which is about 3.3 percent.
Shock said the gap between branch and main campus default rates is a national trend, especially for open-enrollment institutions like Miami Hamilton and Middletown.
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Sophomore Grant Geswein of the Oxford campus said he is concerned about paying back his student loans. Although he said he is not worried about defaulting, he is worried about having his debt linger for a long time. Other Miami students echoed his concerns.
"It's something that hangs over your head, but it's not something you can focus on," junior Emma Keiley of the Oxford campus said.
Many of the students that default on their loans are the ones who drop out after one or two semesters, Shock said.
Miami has a plan in place to help students that are at risk of defaulting.
"I don't think an institution is happy with any people defaulting on a student loan," Shock said. "Anyone that defaults is my concern."
Miami receives a report every month from the U.S. Department of Education that shows people who are behind on their payments. Advisers reach out to those individuals and urge them to call a federal servicing agent and get on a better payment plan, Shock said.
According to Shock, Miami is also planning to partner with an outside agency to assist them in this process. The goal is to connect the graduate at risk of going into debt with their servicers.
If a graduate finds him or herself late for payments, the best thing to do is not panic, Shock said.
Shock said graduates often put off dealing with payment notices, only exacerbating the problem.
"There really is no reason why someone should go into default on a federal loan because they have all kinds of protections built in," Shock said.
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