Financial literacy pays off for EMU students when repaying student loans
YPSILANTI - Armed with financial information and counseling, Eastern Michigan University students who borrow loans are staying ahead of the game when it comes to paying off their bills after graduation.
According to a U.S. Department of Education preliminary report, only 2.6 percent of EMU students who borrowed Stafford loans through the Federal Family Education Loan Program failed to make loan payments during the fiscal year 2004. The Stafford Loan Program is the largest federal student loan program in the U.S.
Eastern Michigan awards more than $124 million in scholarships, grants, work study and loans. Of that amount, $68 million are Stafford Loans.
"Eastern Michigan's preliminary default rate for this group is considered excellent in the industry," said Bernice Lindke, EMU's assistant vice president of enrollment services. "This represents a 39-percent drop from the previous year's default rate of 4.2 percent."
Final 2003 default rates will be released by the Department of Education in September, said Lindke. Schools with default rates greater than 10 percent may incur penalties that can include the loss of eligibility to participate in federal financial aid programs.
Rates are calculated by reviewing the records of students scheduled to begin their loan payments Oct. 1, 2002 to Sept. 30, 2003 and then determining how many were not making payments on their loans. During this period, only 94 of 3,583 EMU students failed to begin repayment.
Lindke credits EMU's success rate to several focused initiatives.
"In addition to providing entrance and exit loan counseling, letters containing debt management information and loan repayment schedules were sent to all students who borrowed $35,000 or more. Average salaries for different job categories were included to help students think about their future ability to repay loans," she said. "We also began sending all of our sophomore students information on their cumulative loan debt and reminding them of the consequences of defaulting on their loans."
The exceptionally low interest rates and loan consolidation options in recent years have also encouraged many borrowers to develop consistent repayment practices, said Lindke.
"EMU's financial aid staff are to be commended for making financial literacy a priority on their campus," said Diane Todd Sprague, director of the Michigan Guaranty Agency, which insures student loans and administers the Federal Family Education Loan Program for the federal government.
Eastern Michigan University is a public, comprehensive university that offers programs in the arts, sciences and professions. EMU prepares students with the intellectual skills and practical experiences to succeed in their careers and lives, and to be better citizens.
Eastern Michigan University is a public, comprehensive university that offers programs in the arts, sciences and professions. EMU prepares students with the intellectual skills and practical experiences to succeed in their career and lives, and to be better citizens.
Editor's Note: Looking for an expert source for a story? Check out EMU's Eastern Experts online at www.emich.edu/univcomm/easternexperts.