Nebraska: With Loan Default Rates High, UNL Offers Solutions

"College students are defaulting on their loans more often than they have since 'Toy Story' was in movie theaters. According to the Department of Education, one in 10 recent borrowers defaulted within the first two years," The Daily Nebraskan reports. "But the University of Nebraska-Lincoln’s Office of Scholarships and Financial Aid and Money Management Center have kept UNL’s student default rate down to about 4 percent, as of 2011. Craig Munier, director of the Office of Scholarships and Financial Aid, said 61.9 percent of undergraduate students and 46.4 percent of graduate students were indebted to student loans in May 2010 at UNL. And those numbers are likely greater in more recent years. 'Every opportunity, when we talk in presentations or when I am asked to talk in classes, I talk about good borrowing versus bad borrowing,' Munier said. 'My distinction of that is when you are borrowing money to pay tuition or if you have a good reason that a college degree will return its investment, then borrowing for tuition seems like a good investment, because you can have a reason to believe that, though you have a debt, it will return on its investment.' Bad borrowing, Munier said, means that a student is borrowing money simply to raise his or her standard of living, such as eating out or buying more cable channels. 'Long after you’ve eaten the pizza or lived in the single apartment without a roommate, the debt still remains, and you have nothing to show for that investment,' he said. As well as financial aid advice and scholarships, the university prevents student loan defaults by strictly enforcing the federal guidelines on student progress. If a student is not doing well enough academically, he or she may not be eligible for loans. According to Munier, there are several alternatives to defaulting. Unemployed students may be able to apply for “hardship deferment.” There are also income-based repayment alternatives in which a student pays a portion of his or her income instead of defaulting."

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