Preventative measures put in place by the Office of Student Financial Services at The University of Texas-Pan American have helped the student loan default rate at UTPA remain low despite high default rates at the state level.
Even though Texas finished second in the nation for the rate of federal student loan defaults at 9.3 percent, UTPA's default rate is considerably lower at 3.2 percent. The U.S. Department of Education put the national default rate at 6.7 percent, up from 5.2 percent the previous year.
UTPA's Assistant Director of Student Financial Services Karla Flores said the University hired a full-time default prevention officer and three student assistants to coordinate the default aversion efforts on campus.
"These employees do not act as collectors, but rather provide information and assistance to borrowers," Flores said. "We want students to know that we are here to help with the borrowing process."
She said defaulting on a loan can prove to be very detrimental to a student's financial situation.
"A student who defaults on their student loan becomes ineligible to receive any Title IV financial assistance, such as grants and loans. The student will not be allowed to enroll for additional classes or receive an academic transcript, unless they have made payment arrangements with the agency or organization that holds the defaulted loan and they have made at least three consecutive payments," Flores said. "In addition, the student can be sued, have IRS refunds seized, wages garnished, a tax lien placed on their social security number, lottery winnings withheld, and they might not be allowed to have a professional licensed renewed."
She said a study showed that freshmen were more likely to default on their loans, which led the UTPA Student Financial Services office to take a proactive approach with those students who were identified as at risk.
"First-time freshman borrowers are required to meet with the default prevention officer prior to receiving a loan," Flores said. "During this meeting students receive counseling on their rights and responsibilities as student borrowers and are informed about the consequences of defaulting on student loans."
Flores said excessive borrowers are also required to attend loan counseling sessions, where they learn about responsible borrowing and are advised of the expected repayment schedule. Additionally, the Student Financial Services office has offered to help facilitate loan deferment to make it easier for students to avoid defaulting on loans.
"We fax deferments to a student's servicer and forward a copy of the student's deferment and enrollment verification to the appropriate organizations," she said.
For more information about student borrowing, contact the UTPA Office of Student Financial Services at 956/381-2501.