IU has second lowest loan default rates in Big Ten

IU has one of the lowest loan default rates for Federal Perkins loans of Big Ten universities, according to data compiled by Purdue University.\nFor the 2001-02 school year, IU had a 2.63 percent default rate, compared to Northwestern University's 2.89 percent and the three-time leader University of Wisconsin with a 2.35 percent default rate. Ohio State had the highest default rate at 10.04 percent.\nStarted in 1958, the Perkins loan is the oldest form of financial aid. Over $6 Million is given through the loan to about 3,100 IU students every year. \nDirector of Student Loans Barbara Bright attributes this statistic to aggressive action of the part of the loan collectors.\n"We definitely pursue the people," she said. "A lot has to do with working with the students to help them pay off their debts."\nBill Ehrlich, public relations director for the Office of Financial Aid, said he agrees.\n"I think the student loan administration does a good job tracking these students," Ehrlich said. "By keeping an eye on these students, they are making sure everything gets paid."\nEhrlich added that different parts of the country have different economic statuses.\n"Regional differences may factor in," he said. "Certain areas are more depressed than others."\nAnother reason why IU's default rates are so low may be that more students are consolidating their loans, Ehrlich said.\n"For example, a student who has graduated with a Stafford and Perkins loan, because interest rates now are extremely low, they are putting the loans together and paying it at a lower interest rate," Ehrlich said. "Once they consolidate it, the Perkins loans are paid by the company that consolidates the loans pays IU the money on the spot."\nEhrlich also said these consolidated loans are easier for most students to pay. \n"There are more options available to them at that point," Ehrlich said. "One of the payment plans goes on for 25 years and these long term payouts are a lot simpler for some graduates."\nIn addition, Perkins loans have a flat 5 percent interest compared to the consolidated loans which vary according to the national interest rates. Ehrlich said many students are taking advantage of consolidated loans because interest rates are the lowest in years. \nThe low default rate also benefits IU, Ehrlich said. With the Perkins loan, all the money for students comes from students repaying their loans, so a low default rate means more money for IU students. \nEhrlich added the rate is "phenomenal" considering many students who pay off these loans have considerable financial need. \nPerkins loans must be paid off with at least $50 a month and must be paid off in no more than 10 years. Students start repaying the loan after graduation or 6 months after they drop out.