San Diego default rate on college loans is less than national average
San Diego State University is one of the public colleges in the county that runs its own food inspection program. Photo by Sam Hodgson

San Diego default rate on college loans is less than national average

The Department of Education announced Wednesday that the federal student loan default rate was 13.7 percent, down from from 14.7 percent last year. Schools in San Diego County outdid the rest of the country slightly, with a default rate of 12.7 percent.

As students take on more college debt, schools and the federal government are keeping a close eye on how many of them are defaulting on their loans.

The default rate measures the number of people who had to start paying back federal student loans during fiscal year 2011 but who have defaulted. A loan is considered in default after 270 days without payment.

San Diego County is home to 47 postsecondary institutions, everything from private for-profit technical schools, such as Kaplan College, to public four-year universities, such as San Diego State University.

Of those, private nonprofit schools had the lowest default rates of just 4.2 percent. That trend is mirrored nationally, with a nonprofit default rate of 7.2 percent.

Public schools in San Diego overall, however, ranked lower than their national counterparts with a default rate of 16 percent versus 12.9 percent nationally. There were exceptions. The University of California, San Diego had a default rate of just 2.9 percent.

Default rates often are influenced by how likely graduates are to land a job, as well as how well that job pays. At UCSD, an average grad’s starting salary is $49,300, according to PayScale.com. A UCSD Career Services Center survey of December 2012 to June 2013 graduates found that about three out of four respondents had a job. The rest had started graduate or professional school.

“Our statistics show our students do gain employment upon graduation,” said Christine Clark, a public information representative at UCSD. “Often their starting salaries are higher than the national average starting salary as well.”

Search our database of San Diego County postsecondary institutions and their default rates.

San Diego State University also scored a relatively low default rate of 5.2 percent. Chris Collins, associate director of SDSU’s Financial Aid and Scholarship Office, said.

Having a low default rate allows SDSU to give first-time freshmen loan money without having to wait the typical 30 days. Collins said that benefits students because most of freshmen’s costs come at the start of the semester.

Among public schools, students from community colleges struggled the most paying back their federal student loans. Palomar College and San Diego City College both had default rates close to 30 percent.

But the default rate is based just on students who took out federal loans. At most of the community colleges those students represent a tiny percentage — sometimes less than one percent — of the overall student body. The Department of Education warns against drawing conclusions from schools with small groups of borrowers.

The last category is private for-profit schools. Nationally, students from these institutions had the worst default rates at 19.1 percent. In San Diego, the schools fared better — with an average default rate of 15.4 percent.

One of the private for-profits, San Diego College, is one of 21 institutions facing sanctions from the Department of Education over its high default rate. According to the latest numbers, almost half of SDC students with federal loans defaulted within three years.

The school can appeal, but if the sanctions remain, students attending SDC won’t be able to access at least some federal loans.

SDC did not return a call for comment.

The school is required to submit a fact sheet to California’s Bureau for Private Postsecondary Education. The fact sheet is on the school’s website and must be signed by all prospective students before enrolling. The fact sheet states 98 percent of students attending SDC in 2013 received federal student loans to help pay for their education.

Of the 210 students who enrolled in a program at SDC in 2013, 1 in 5 graduated on time. Almost 70 percent graduated after taking one and a half times as long as the program was scheduled for. And of those 210 students, only 35 percent reported getting a job in their field of study.

inewsource staff member Victoria Mendiola contributed to this report.

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About Leonardo Castañeda:

Leonardo Castañeda
Leonardo Castañeda is a reporter and economic analyst for inewsource. To contact him with tips, suggestions or corrections, please email leocastaneda [at] inewsource [dot] org.