Utah college students have learned one lesson better than most: how to pay off student loans.
Utah had the sixth-lowest default rate last year among the states, according to U.S. Department of Education data released Tuesday.Utah's rate was 5.9 percent, meaning one of every 17 students who began to owe payments in 1995 had defaulted by Oct. 1, 1996.
But that's only about half the national rate of 10.4 percent. Even the national rate is relatively good.
"The current level is better than a 50 percent reduction from the highest default rate of 22.4 percent recorded in fiscal 1990," said Education Secretary Richard W. Riley.
He said lower rates come from "more aggressive collections efforts" by schools, lenders and guaranty agencies, and a strong economy that creates more jobs that "helped borrowers enter into repayment and stick with it."
Chalmers Gail Norris, associate commissioner for student financial aid for the Utah System of Higher Education, said Utah's default rate is lower because the Utah borrower is typically a student attending a four-year school. Those students tend to graduate and have a lower default rate.
Norris said the incentives offered under Utah's student loan programs encourage timely repayment. If a borrower pays on time the first 48 months of a loan, the interest rate on the note is reduced 2 percent. An interest break also is offered to borrowers who agree to pay their loans through an automatic withdrawal from their checking accounts.
"The last two or three years we've really emphasized counseling beyond what the federal government requires to advise students not borrow more than they really need," Norris said.
The state makes a concentrated effort not to permit students to default. Seven "default prevention" specialists attempt to work between borrowers and servicing agencies to come up with payment options to avert a default.
Private proprietary schools - such as those teaching hair styling and electronics repairs - tended to have higher default rates in Utah and the nation than did colleges and universities.
Data show that 40 percent of Utah proprietary schools had default rates higher than the national average, while 23 percent of Utah colleges and universities exceeded that average.
Sherman Kendall's Academy of Beauty Arts & Sciences had the worst - and best - default rate in the state, depending on which two of its sites is examined.
Its Salt Lake City site had a default rate of 28.1 percent. Because it had exceeded a default rate of 25 percent for three straight years, that could have triggered dropping it from federal student loan programs. But Education Department data indicated that school already stopped participating.
However, that beauty school's site in Sandy had a 0 percent default rate - tying it for the lowest of any institution in the state.
Among bigger colleges, Brigham Young University had the lowest default rate in the state - 1.3 percent.
It accomplished that while also having the most students of any institution in the state who began owing repayments in 1995 - 4,057 students (with only 54 defaulting).
Utah State University was next best with a rate of 3.2 percent (with 58 students out of 1,819 defaulting), followed by Southern Utah University with 4.2 percent (with 31 students of 737 defaulting).
Fourth best was the University of Utah with 4.7 percent. It had the second-highest number of students among Utah schools begin repaying loans - 3,333, of which 156 defaulted.
Three state-run schools exceeded the national default rate average: Sevier Valley Applied Technology Center in Richfield, 14.6 percent; and the College of Eastern Utah and Salt Lake Community College, both with 11.9 percent.
Although above the national average, Norris noted that the figures released Tuesday reflect significant drops in default rates at each institution.
"I think that's pretty admirable," Norris said.
While default rates dropped overall nationally, Riley said some recent trends are still worrisome. For example, default rates at colleges are increasing (while they are dropping at proprietary schools).
And Riley noted, "Students are borrowing at record levels to pay for college. That raises an important question: is increasing debt directly related to the increase in default rates for public and private two-year and four-year," colleges?
On the other hand, Riley said other developments should help decrease the need for student loans.
"President Clinton's $1,500 HOPE tax credit for the first two years of college and the 20 percent Lifetime Learning tax credit recently passed by Congress will hopefully make college more affordable and hopefully reduce student debt," he said.
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ADDITIONAL INFORMATION
Deadbeat grads
Default rate on student loans
Universities, Colleges and State Trade Schools
Sevier Valley Applied Technology Center (Richfield) 14.6%
College of Eastern Utah (Price) 11.9%
Salt Lake Community College (Taylorsville) 11.9%
Weber State University (Ogden) 6.7%
LDS Business College (Salt Lake City) 6.6%
Snow College (Ephraim) 6.6%
Dixie College (St. George) 6.2%
Utah Valley State College (Orem) 6.0%
Westminster College of Salt Lake City 5.5%
University of Utah (Salt Lake City) 4.7%
Southern Utah University (Cedar City) 4.2%
Utah State University (Logan) 3.2%
Brigham Young University (Provo) 1.3%
Proprietary Schools
Sherman Kendall's Acad. of Beauty Arts & Sciences (S.L.) 28.1%
Certified Careers Institute (West Valley City) 21.5%
Beau La Reine College of Beauty Culture (Logan) 20.5%
Stevens Henager College of Business (Ogden) 16.2%
Utah Career College (South Salt Lake) 15.6%
Mountain West College (Salt Lake City) 14.8%
Fran Brown College of Beauty (Layton) 11.7%
ITT Technical Institute (Murray) 11.4%
Utah College of Massage Therapy (Salt Lake) 10.6%
Premier Hair Academy (West Valley City) 10.0%
Stacey's Hands of Champions Beauty College (Ogden) 9.5%
Hairitage College of Beauty (Murray) 7.9%
Evans Hairstyling College (St. George) 7.7%
Von Curtis Academy of Hair Design (Provo) 6.2%
Myotherapy Institute of Utah (Salt Lake) 6.1%
American Inst. of Medical & Dental Tech. (Provo) 4.5%
Evans Hairstyling College (Cedar City) 3.4%
Bon Losee Academy of Hair Artistry (Provo) 1.9%
Provo College 1.9%
Intermountain College of Court Reporting (Murray) 1.5%
Mary Kawakami College of Beauty (Provo) 0%
Sherman Kendall's Acad. of Beauty Arts & Sciences (Sandy) 0%
*Data are for students who began owing repayents in 1995 and had defaulted by Oct. 1, 1996. Source: U.S. Education Department.