75% of South Dakota(SD) college graduates leave school with student debt, the highest rate in the country, yet the state has one of the lowest rates of student loan default.
Of the 42,082 South Dakota college students who were scheduled to start paying back loans between ’07 and ’09, just 4.9 percent failed to pay.
That’s the tenth-lowest rate among all states and below the national average of 7.5 percent, according to data reported by the U.S. Department of Education.
South Dakota’s public college students had the lowest default rates at 3.4 percent; private colleges were at 4.5 percent, and for-profits, 10.3 percent.
The strong overall pay-back rate belies South Dakota students’ heavy reliance on borrowed money to fund their education. Seventy-five percent of the state’s 2010 college graduates had some student debt, according to the Project on Student Debt; the average amount owed was $23,171, 25th among all states.
“Thus far, (student debt is) still in a manageable range,” Board of Regents President Kathryn Johnson said last month.
Jack Warner, executive director for the board, said the low default rate shows students are getting the jobs they need to pay off the loans. The average amount owed is “certainly well within the wage premium to pay back,” he said.
However, in South Dakota and across the country, default rates have been headed in the wrong direction lately. From 2007 to 2009, the most recent figures available, South Dakota’s rate climbed from 3.8 percent to 4.3 and 6.5.
The country’s default rates on students loans in that time went from 6.7 percent to 7.0 and 8.8 — the highest since 1997.
Even as they’ve raised tuition rates in response to funding cuts from the state, the Board of Regents have taken steps to reduce the cost of college.
Bachelor’s degrees now require 120 credit hours instead of 128, for example, and the colleges are working with the K-12 system to identify teens who should be shoring up crucial skills while they’re in high school so they don’t have to take remedial courses when they get to college.
The regental colleges also have begun to focus more heavily on the number of students they retain and graduate, not simply the number they enroll. Because without a college degree, it’s going to be harder to make good on your student debt.