Texas Tech Student Loan Default Rate Well Below National Average

Texas Tech University students are repaying their federal loans at a rate higher than the national average.

Texas Tech University students are repaying their federal loans at a rate higher than the national average.

For students who began repaying federal Stafford Loans in 2005, the default rate for Texas Tech students is 2.8 percent as compared to the national default rate of 4.6 percent.

"We work very hard to make sure that any student with a loan understands the ramifications of not repaying their federal loans," said Becky Wilson, director of the Texas Tech Office of Financial Aid. "Defaulting on a federal loan will not only have a negative impact on their credit history, it could also result in the garnishment of wages, the seizure of income tax returns and becoming ineligible for any future student loans."

In 2005, the latest year for which federal figures are available, 5,991 Texas Tech students began repaying federal Stafford Loans. There are two types of Stafford Loans: one is based strictly on need while the other is available to any student. A student may receive several separate Stafford Loans during their college career to use for any purpose.

"The Texas Tech financial aid office emphasizes responsible borrowing to every student who takes out a loan," said Wilson. "Loans are beneficial in funding education and we try to drive home the point that loans should be taken only for education purposes and necessities, not to help cover the cost of a ski vacation."

Default rates can also impact a university’s ability to supply all types of federal loans. Wilson says that if a university’s default rates remain above 25 percent for three years or exceed 40 percent in a single year, it can result in loss of federal aid such as Pell Grants, Stafford and PLUS loans, which make up the majority of financial aid that is awarded at Texas Tech.

To keep default rates low, the Office of Financial Aid has instituted a number of programs to help educate student borrowers, including requiring students to complete loan counseling once a year instead of federally mandated once during their college career. The office also distributes printed and electronic information to students who are about to graduate or leave school reminding them of their loan repayment options.

"We have also made sure that our staff is educated so that they can help students while they are in school," said Wilson. "We also require that groups who actually make and service the loans be active in providing assistance to student borrowers."

Wilson said the office also works closely with Texas Tech’s Red to Black program. The program is part of the Division of Personal Financial Planning in the College of Human Sciences. It offers free financial counseling, seminars and presentations on personal finance topics such as money management, choosing a credit card, paying off debt, saving money, and comparing employer-provided benefits when choosing a new job.

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CONTACT: Becky Wilson, director, Texas Tech Office of Financial Aid, (806) 742-3426 ext. 224.