WASHINGTON — The Education Department said Tuesday that the nation's student loan default rate dropped to an all-time low of 5.4 percent, capping an astounding turnaround since it hit a high of 22.4 percent in 1990.
And for the first time ever, no school in the nation is facing losing eligibility for federal loan programs because of default rates that are too high. That comes after 1,200 schools lost such eligibility nationwide during the past decade.
Even better news locally is that the default rate among alumni of Utah colleges was just 3.8 percent, almost a third lower than the national average. Rates for some of the larger Utah schools ranged from 0.7 percent at Brigham Young University to 2.3 percent at both the University of Utah and Utah State University.
"Today's news shows that student loan borrowers know the value of investing in their future and honoring their financial obligations," Education Secretary Rod Paige said as he released the new data.
The improvement comes after the federal government stepped up efforts over the past decade to go after defaulters and any schools that may have enticed too many students into loans beyond their likely ability to repay.
"Our increased efforts are paying off — schools, lenders, guaranty agencies, servicers and the department are working together and making diligent strides to assist students in meeting their repayment obligations," Paige said.
Paige noted that the current interest rate on federal Stafford loans for college students was at an all-time low of 3.42 percent, making loans easier to repay. As recently as three years ago, the rate was more than twice as high, at 8.19 percent.
The current rate for Parent Loans for Undergraduate Students (PLUS) has also dropped to an all-time low of 4.22 percent.
The new 1991 default rates are a snapshot in time for those borrowers who began repaying their loans between Oct. 1, 2000, and Sept. 30, 2001, and who defaulted before Sept. 30, 2002.
Default rates in Utah ranged from a low of 0 percent — achieved by five small proprietary schools — to a high of 15.6 percent at the private Mountain West College in West Valley City.
The default rates at major Utah public colleges and universities were: College of Eastern Utah, 7.7 percent; Dixie State College, 6.2 percent; Salt Lake Community College, 5.5 percent; Snow College, 5.2 percent; Southern Utah University, 3.2 percent; University of Utah, 2.3 percent; Utah State University, 2.3 percent; Utah Valley State College, 1.9 percent; and Weber State University, 4.0 percent.
The rates at larger private schools included: Brigham Young University, 0.7 percent; LDS Business College, 1.8 percent; Stevens Henager College, 12.1 percent; and Westminster College, 2.5 percent.
Rates at other private and proprietary schools included: American Institute of Medical & Dental Technology, 4.9 percent; Beau La Reine College of Beauty Culture, 1.5 percent; Ben Losee Academy of Hair Artistry, 0 percent; Certified Careers Institute, 12.2 percent; Eagle Gate College, 0 percent; Evans Hairstyling College, 0 percent; Fran Brown College of Beauty, 5.0 percent; Francois D. Hair Design Academy, 0 percent; and Hairitage College of Beauty, 8.3 percent.
Also, International Institute of Hair Design in Bountiful, 5.7 percent; ITT Technical Institute, 7.7 percent; Mountain West College, 15.6 percent; Myotherapy College of Utah, 4.8 percent; Paul Mitchell: The School, 2.2 percent; Provo College, 9.5 percent; Sherman Kendall's Academy of Beauty Arts and Sciences, 2.3 percent; Stacey's Hands of Champions Beauty College, 0 percent; and Utah Career College, 11.0 percent.
Schools may be dropped from eligibility for participation in federal loan programs if their students' default rates are 25 percent or greater for three consecutive years, or greater than 40 percent in one year. No Utah schools were near those thresholds this year.
E-mail: lee@desnews.com