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HPU student loan defaults hit record low

by Kalamalama staff

HPU’s student loan default rate has dropped to an all-time low of 2.8 percent, according to a U.S. Department of Education announcement released this month. The default rate measures the percentage of borrowers who have defaulted on their federal student loans within 12 to 24 months of leaving college. The latest data available are for borrowers who left college in the 2001 fiscal year.
 

HPU’s student loan default rate is substantially lower than the national average, which was recorded as the lowest to date at 5.4 percent. HPU is also the lowest among schools in Hawai‘i that have 55 or more borrowers in repayment. The Hawai‘i default rate average was 5.5 percent.

“ Hawai‘i Pacific’s low rate is a significant achievement, especially since it comes at the end of a 10-year period of tremendous loan growth,” said Walter Fleming, associate vice president of Student Support Services. “Our students are meeting their responsibilities to repay their loans. This indicates that they are doing whatever is necessary to repay their loans upon graduation.”

Fleming credits much of the success to Carol Hutaff, director of Student Loans, and the default management program she implemented, which involves aggressive follow-up with students across the country, personal and credit counseling, flexible repayment schedules, and customized repayment plans.

Hutaff consider that her most important contribution has been the ability to take away the fear students have in communicating with their lenders. “Once that fear is dissolved, students are better able to speak to their lenders and guarantors about the different options available to them,” Hutaff said. “Communication is key.”

The current interest rates on federal Stafford loans are now at an all-time low of 3.42 percent, making loan payments more affordable than ever. As recently as three years ago, the interest rate was more than its cap at 8.25 percent. The current interest rate on Parent Loans for Undergraduate Students (PLUS) has dropped to 4.22 percent—also the lowest rate ever.

The Higher Education Act of 1992 mandates that schools with excessive default rates may be dropped from one or more federal student aid program. Schools with default rates of 25 percent or greater for three consecutive years face loss of eligibility in the loan and Pell Grant program. Schools with a default rate greater than 40 percent for one year face immediate loss of eligibility in the loan programs.

 

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