ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Monday, January 13, 1997 TAG: 9701130055
SECTION: VIRGINIA PAGE: B-6 EDITION: METRO
DATELINE: RICHMOND
SOURCE: Associated Press
Virginia's colleges saw a significant drop in the rate of student loan defaults in 1994, a new report shows.
The U.S. Department of Education found the fiscal 1994 default rate was 10.7 percent - the lowest since the government began tracking it in 1988. During the recession in 1990, the default rate peaked at 22.4 percent.
Across Virginia, public two- and four-year colleges saw significant drops in students' failure to repay their federal loans in 1994, the latest for which data is available. The highest rate, 25 percent, was at Central Virginia Community College in Lynchburg. But that compared with a 1993 high of nearly 33 percent at Lord Fairfax Community College in Middletown.
Virginia's community colleges have relatively high default rates because of their open admissions policy and large number of older working students, many of whom also have families to support, said Joy Graham, assistant chancellor of the Virginia Community College System.
The default rates also fail to reflect the small size of many community colleges, making the percentage of students in debt appear high even though only a handful of students may be in default on their loans, she said.
``I believe every student has the intention of paying their loans back. But they live paycheck to paycheck," Graham said. ``When circumstances overcome that, the loans are something they put off until later.''
Statewide, only two community colleges had default rates topping 20 percent in the latest report. And Paul D. Camp Community College in Franklin showed no students failing to pay loans, making it one of a handful of colleges of any type with a flawless score.
Default rates also were down at Virginia's four-year colleges, only a few of which recorded double-digit rates. Virginia State University in Ettrick and Virginia Union University in Richmond saw their rates drop by several points each, to 17 percent at VSU and nearly 19 percent at VUU.
Leading the list among four-year colleges was Norfolk State University, with a default rate of 22.2 percent - up from 20.2 percent in 1993.
The state's historically black colleges and universities, like many of their counterparts nationwide, have a high percentage of students who rely on loans to cover tuition, leading to higher default rates. These schools also have smaller endowments from which to provide direct scholarships.
The declining default rate trend extended to many proprietary schools in Virginia, though these for-profit schools continue to have the highest failure rates here and nationally.
Topping Virginia's default list was the Suffolk Beauty Academy, where half the students failed to repay loans on time in 1994. But the Portsmouth School of Beauty Culture, which topped the charts in 1993, saw its default rate drop from 46 percent to 32 percent.
Many colleges and trade schools have improved counseling programs for students to help them better understand loan requirements. National loan programs also are offering more flexible repayment options.
At the same time, the volume of student loans has nearly doubled nationally, rising from $12.3 billion in 1990 to $23.1 billion in 1994. More students are borrowing money to get through school and the size of loans has increased as tuitions have soared in recent years, the report said.
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