Arizona’s student loan default rate tops nation

A U.S. Department of Education report lists Arizona as having the nation’s highest rate of student loan defaults, but where the state really stands comes down to how you view the numbers.

That’s because the report counts loan defaults by schools based in a state. That means the for-profit University of Phoenix, with its nationwide student body, counts toward Arizona’s rate.
And count it does.

While the report lists the state’s default rate at 10.9 percent for fiscal 2008, removing the University of Phoenix lowers Arizona’s rate to around 8 percent. That’s much closer to the national rate of 7 percent.

Those attending the University of Phoenix, which had a default rate of 12.9 percent, accounted for 70 percent of loan defaults attributed to Arizona, the report showed.

Arizona’s default rate was 9.8 percent in fiscal 2007, when it also was highest in the nation. The default rate in fiscal 2006 was 9.2 percent, placing Arizona second behind Kentucky

Youth unemployment is now at 20 percent, the highest since the 1940s, hindering borrowers from paying off their loans, The report also shows community colleges tend to have higher default rates, with 14 out of the state’s 20 colleges above 10 percent.

In contrast, the state’s public universities all have rates in the low single-digits: 3 percent at Arizona State University, 4.3 percent at Northern Arizona University and 4 percent at the University of Arizona.

The report represented borrowers who entered repayment in the 2008 fiscal year but defaulted before Sept. 30, 2009. That is a total of 3.4 million borrowers nationwide, of which more than 238,000 have defaulted, it said.

Including University of Phoenix, Arizona had 223,468 loans in repayment with 24,531 in default for that period, the report said.

Student loan default rates by school:
• ASU: 3 percent
• NAU: 4.3 percent
• UA: 4 percent
• Grand Canyon University: 3.4 percent
• University of Phoenix: 12.9 percent
• Mesa Community College: 12.8 percent
• Pima Community College: 13.1 percent
• Arizona Western College: 16.1 percent
• Gateway Community College: 10.6 percent
• Chandler-Gilbert Community College: 8.5 percent
• Mohave Community College: 15.7 percent

Top states for loan defaults:
• Arizona: 10.9 percent
• Arkanasas: 10.1 percent
• Iowa: 9.9 percent
• Kentucky: 9.6 percent
• Colorado: 9.2 percent