Editor's Note: Because of a factual error, this story has been corrected.
Some ASU graduates are having a difficult time repaying student loans, according to data released Sept. 12 by the U.S. Department of Education.
The default rate for ASU graduates paying off federal loans rose between fiscal years 2008 and 2009, jumping from 3 percent (357 graduates) to 3.9 percent (391 graduates). This increase came with a drop in the number of former students making repayments. In fiscal year 2009, 9,949 graduates started repaying their loans – a decrease from 11,581 in 2008.
The numbers apply only to students enrolled in the Federal Family Education Loan Program and the William D. Ford Federal Direct Loan Program.
Students default on their loans when they do not begin repayment 270 days after they graduate, according to the DOE. Defaulting on a loan prohibits a student from receiving any further federal financial aid awards until the loans are repaid, and the loan cannot be discharged through bankruptcy. Lenders can also take legal action to get the money back.
“There are a variety of reasons for the increase in defaults — one mainly being that the bad economy is making people more financially stretched,” said Deanne Loonin, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, an organization that provides resources to borrowers, their families and advocates representing student loan borrowers.
According to the data from the DOE, more than 3.6 million borrowers from 5,900 schools entered repayment for the 2009 academic year, and more than 320,000 defaulted.
“For those facing default, it is important to look into options and try not to be in denial about the loan,” Loonin said.
The average indebtedness for ASU students at graduation is $18,542, according to College Board, an organization that connects students with colleges and provides financial support and scholarships.
Business and psychology junior Briana Martinez said she is facing close to $30,000 in student loans. Last week, Martinez received a notice from her financial aid distributer reminding her of repayment beginning six months after she graduates.
“I added a double major and I am probably going to do a triple major … that way I can make sure I have a job when I graduate,” Martinez said. “How am I going to afford my student loans and living without having to go back to my parents’ house?”
Loonin said in most cases, with different payment options available, students are able to figure out an affordable payment before defaulting becomes a problem.
Political science and psychology junior Faith Makris has not taken out student loans yet, but said she may have to when she goes to law school after graduation.
“I am planning on staying at home, saving money and paying for it that way,” Makris said.
Makris has advice for other students facing loans.
“Avoid them as much as you can and add as many majors as you can to guarantee you have a job,” she said.
Reach the reporter at newlin.tillotson@asu.edu
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