By Sean Collins-Smith
VCU students graduate deeper in debt than students from similar schools and from Virginia’s other public colleges and universities. Moreover, as the U.S. economy has sputtered in recent years, VCU alumni are having more trouble repaying their student loans.
Those trends are evident in two recent studies on college student loans:
- The Institute for College Access and Success reported last week that 61 percent of VCU’s 2010 graduates had loans to repay, and that their average debt was $25,151. VCU’s numbers were higher than almost all other public universities in Virginia. At James Madison, for example, half the students graduated in debt, and the average debt was $20,417. VCU also ranked higher than most of its official peer institutions – schools such as the University of Louisville (where 47 percent of the students graduated in debt, and the average debt was $18,713).
- The U.S. Department of Education reported in September that 3 percent of VCU students who were supposed to start repaying school loans in 2009 defaulted. That was a big jump from VCU’s 2.3 percent default rate for 2008. In loan default rates, VCU is average among its peer institutions. But VCU has a higher default rate than most other public schools in Virginia. For instance, James Madison and George Mason universities had 2009 default rates below 2 percent.
Those figures aren’t surprising to VCU alumna Sara Ben-Abdallah, who studied at the School of the Arts and accrued over $40,000 in student loans during her five-year tenure.
“The economy is absolutely horrible right now, and many people can’t find jobs that let them pay their regular monthly bills, let alone student loans,” Ben-Abdallah said.
In that light, VCU’s 3 percent default rate doesn’t look so bad, she said.
“Honesty, I’m surprised it isn’t higher,” Ben-Abdallah said.
U.S. Labor Department figures show that the national unemployment rate is at 9.1 percent. For Virginia, the unemployment rate is 6.5 percent.
Still, even for people with jobs, the situation can be tough.
“I’ve been paying back loans for 12 months,” said VCU graduate Adam Hyatt, who spent four years studying painting and printmaking at the School of the Arts and graduated in 2009.
“I can’t pay back the amount they suggest, because I don’t make enough money,” Hyatt added. “So I’m stuck paying $180 a month until I either get a better job or all the loans are paid off.”
At $180 a month, how long would it take to pay off his loans?
“About 20 years,” Hyatt said. “It’s supposed to jump up to over $400 in three years, but I know I won’t be able to pay that much.”
Project on Student Debt
Hyatt is hardly alone in his worries about student loans, according to the Institute for College Access and Success. The group issued a 14-page report and launched a website about the project as part of its initiative called the Project on Student Debt.
“Student debt continues to rise, but debt levels vary tremendously from school to school and state to state,” Matthew Reed, the author of the report, wrote.
“Nationally, two-thirds of the Class of 2010 entered a tough job market with debt averaging $25,250, up from $24,000 for the Class of 2009.”
VCU is about at the national average, with students graduating with an average debt of $25,151. But VCU ranks less favorably compared with the other public institutions in Virginia.
Virginia has 15 state-funded four-year colleges and universities. The Project on Student Debt obtained data for 14 of them (all but Norfolk State University).
Of the 14 public schools for which data were available, only Virginia State University had a higher average student debt than VCU, at $28,250 per graduate.
VCU was tied for second, with Longwood University, in the percentage of graduates in debt (61 percent). Above VCU were VSU (90 percent) and Old Dominion University (80 percent). At the other end, only about a third of the graduates of the University of Virginia and the College of William and Mary were in debt.
VCU also can be compared with schools that Virginia state officials have designated as the university’s official “peer institutions.” There are 25 peer institutions for VCU, and the Project on Student Debt obtained data for 22 of them.
Eight peers had higher average student debt than VCU. They included Temple University, with $31,123 in average debt, and the University of Miami, with $26,438.
Fourteen peer institutions had lower average student debt than VCU, ranging from the University of Alabama – Birmingham (with $24,936 in debt) to the University of Nevada – Reno ($15,814).
VCU also ranked high in the percentage of graduates who had debts. Only three peer institutions topped VCU’s 61 percent: Temple, the University of Cincinnati and the University of Minnesota – Twin Cities.
Student Loan Default Rates
The U.S. Department of Education reported that the national student loan default rate for fiscal year 2009 was 8.8 percent. This represented the percentage of borrowers whose first loan repayments came due between Oct. 1, 2008, and Sept. 30, 2009, and who defaulted before Sept. 30, 2010. The rate was up from 7 percent the previous year.
Those numbers include for-profit schools and trade schools, which tend to have high default rates. The overall default rate for public four-year colleges and universities was 5.2 percent in 2009. That had jumped from 4.4 percent in 2008.
“These hard economic times have made it even more difficult for student borrowers to repay their loans,” U.S. Secretary of Education Arne Duncan said in a press release. “We need to ensure that all students are able to access and enroll in quality programs that prepare them for well-paying jobs so they can enter the workforce and compete in our global marketplace.”
Compared with its peer institutions, VCU was in the middle of the pack on default rates: 13 peers had higher default rates (Wayne State University topped the list at 6.7 percent); 12 peers had lower default rates (less than 1 percent at Boston University).
VCU didn’t compare as favorably with other public four-year colleges and universities in Virginia. Five of them had higher default rates than VCU, but nine had lower default rates.
Even so, students at for-profit schools had the highest default rates. Tidewater Tech in Norfolk, for example, had a default rate of almost 42 percent; and a quarter of the students at the Centura College campuses in Richmond and Virginia Beach defaulted on their loans.
Those statistics make recent graduate Michael Leonberger thankful he didn’t have to take out loans while he was at VCU.
“I’m so relieved I had enough money to pay those semester bills,” he said. “It’s a huge burden that I’ll never have to know.”
But Leonberger worries for his fellow alumni who are receiving loan repayment notices.
“I have friends who have to start paying back loans in a few months,” Leonberger said. “They’re worried because they might have to move back in with their parents just to start paying off loans. If they can’t do that, then they think they’re in big trouble.”