Chapman’s default rate dips lower

Mady Dewey biking to her job at Google in Chicago. Photo courtesy of Mady Dewey.

In the midst of a student loan crisis, Chapman’s default rate lowers to 2.2 percent.

While the nation is in the midst of a national student loan crisis, with students and graduates owing a collective 1.5 trillion dollars, new data given to Prowl from the Chapman financial aid office shows that Chapman’s default rate is only 2.2 percent. That number inched down from last year but hasn’t gone above 3.3 percent for at least the last three years according to the chart from Chapman’s financial aid office.

A Chapman student is considered to be in default on a student loan if they have not made a payment in more than 270 days.

The cohort default rate is the percentage of students who failed to make payments for at least 270 days within the specified period of time, or “window” (two or three years), about a decade ago, Congress directed the DoE to switch from the 2-year to the 3-year cohort default rate, according to Matt Carter, editor of Credible News.

Chapman’s default rate is less than one-fourth the national default rate, which is 10.8 percent on federal loans. The national percentage includes students who attended  for-profit colleges notorious for low graduation and low job-placement rates and which have sometimes stunningly high rates of default.

“According to the latest numbers from the DoE, the national three year cohort default rate is 10.8 percent. It’s 10.3 percent at public schools, and 7.1 percent at private nonprofit schools like Chapman University. Private for-profit schools (“proprietary institutions”) don’t fare as well — 15.6 percent of students were in default within three years of leaving school,” Carter said.

So, Chapman University students seem to be doing much better than students at many other schools in staying out of default on their federal student loans, Carter said.

 Chapman’s default rate rose one percent between 2012-2014 and was 3.3 percent over three years on federal loans. It dropped by around one percent from 2014 to 2015.

Chapman’s default rate is low because the university has a lot of students from wealthy families, said Antoinette Flores, an associate director for Postsecondary Education at American Progress.

“Chapman’s student body is wealthier on average than students attending college across the country,” Flores said, noting that only 18 percent of Chapman students received a Federal Pell grant, one measure of low-income students.

“Across the country, roughly 40 percent of students receive a Pell grant,” she said.

Students who complete their degrees are generally able to repay their student loans when they graduate, particularly if the total amount they’ve borrowed doesn’t exceed their annual earnings, Carter said.  

“It’s students who drop out — or attend schools that don’t give them marketable job skills — who tend to have the most trouble. A healthy proportion of Chapman University students get their degrees, which undoubtedly helps keep the school’s default rate low,” Carter said.

Only 53 percent of Chapman students take out federal loans compared to roughly 70 percent of college students nationally, according to Flores.  

“There is no ‘usual’ amount that students borrow to attend Chapman,” said David C. Carnevale, Director of Undergraduate Financial Aid.

“If a student were to borrow their federal maximum loan amounts each year, they would borrow $27,000. The average debt from federal loans after graduation, however, is $20,938.” Carnevale said.

Students have 10 years to repay their federal student loans in a standard repayment plan. Not all students opt for this plan, so some have up to 30 years to repay loans.

Students who don’t repay their loans default. When this happens, financial aid officers refer students back to their loan servicers to see what accommodations might be made.

“The servicer is trained to help students figure out what their best options are for any given situation that may arise. They want to work with students; they are not a collection agency,”  Carnevale said.

60 percent of incoming freshman at Chapman take out some type of a loan to finance their education, according to Carnevale. The average amount is $5,750. according to Carnevale.

The chart represents the entire university, not just one population. The federal government does not track default by program, according to David Carnevale. Chart courtesy of David Carnevale.

Mady Dewey, a recent Chapman graduate took out loans in order to get her public relations and advertising degree at Chapman.

“I got 50 percent scholarship at Chapman, but took out student loans for the rest of it,” Dewey said. “I worked multiple jobs in college to pay for rent, food, and life on top of taking out loans for tuition.”

Interest accrued on Dewey’s loans during her four years of schooling at Chapman. “I have decided to refinance my loans at a better interest rate through SoFi. I am currently in a deferment period meaning I don’t have to pay until November so I have been aggressively saving since then.”

Dewey got a job at Google which she anticipates will allow her to pay off her loans in five to eight years. “It’s still going to be tight, but it is doable,” Dewey said.   

Chapman undergraduates borrow an average of $6,227 per year, according to Collegefactual. Borrowing the average amount will result in loans of $12,454 after two years and $24,908 after four.

“I am fully on loans for my first semester of law school.” Chapman law student Austin Jones said. “I think I signed up for a 10 year plan but I might just adjust it depending on how much I make when I come out of law school.”

Around 1.1 million borrowers defaulted on their federal student loans in 2016. On average, more than 3,000 borrowers default on their federal student loans every day according to a study by the Federal Student Aid department.

Student loans now have 44 million borrowers who altogether owe $1.5 trillion in solely the U.S, according to Make Lemonade. It is now the second highest consumer debt category- higher than credit card and auto loans.

When people default, the debt is typically transferred to a collection agency. And, in some cases, borrowers who default are charged even higher interest rates as a penalty for having missed payments.

Emmie Farber, sophomore strategic and corporate communications major, is determined that won’t happen to her.

“I plan on getting a kickass job and saving,” to pay off her student loan debt, she said.

Lauren Thomas

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