DEFAULT RATE ON SOUTHEAST STUDENT LOANS BELOW 20% GUIDELINE

The default rate of guaranteed student loans at Southeast Missouri State University falls considerably below the 20 percent federal guideline that determines if the rate is acceptable.

But university officials still are concerned about students who fail to pay back student loans.

"I'm a taxpayer just like everyone else, and I think all of us need to be concerned that federal funds are being administered properly," said Gene Buck, director of financial-aid services at Southeast.

Government officials proposed this week to prohibit 177 universities and schools across the country with a high loan-default rate from participating in the federal student-loan program.

The U.S. Department of Education has suggested that action be taken against schools with a rate of more than 35 percent for three consecutive fiscal years beginning in 1987.

Buck said that last year Southeast's default rate for student loans was 10.2 percent. And about $5.5 million in student loans were paid out during the 1990-1991 school year, she said. She said the default rate has not increased or decreased significantly over the past several years.

Buck said the average loan-default rate at four-year public colleges is 4 to 5 percent, and anywhere from 30 to 45 percent for community colleges. Because Southeast offers both four-year and two-year educational programs, the 10.2 percent default rate at Southeast isn't entirely unsatisfactory, she said.

But, she said, "We are doing everything we possibly can to get that default rate down."

Students at Southeast receive financial-aid counseling both before and after they receive loans, she said.

"They are told what it means to have a loan and what their rights, responsibilities and obligations are concerning their student loan," Buck said.

In addition, she said, "exit counseling" is given before the student leaves school, where payment schedules are discussed.

Buck said that unlike bank loans, student loans do not require applicants to have a proven credit history or to submit collateral.

"We are required by law to process each application the same. We can't discriminate even if someone comes in and says they have no intention of paying the loan back," she said. "And the collateral is the student's education."

Students receive loans based on financial need, she said, and the loan pays for educational expenses only.

Some of the most common reason students give for not paying back the loans are that they couldn't find a job, or one that pays well after graduation, or that they encountered some type of medical hardship, Buck said.

"They need to remember that they can discuss these difficulties with their lender, and most of the time they are able to work something out," she said.

Buck said she expects higher admission standards enacted recently at Southeast to help lower the default rate.

"We are becoming more selective and are admitting better students," she said. "I think they will have a commitment to their education."

But she also said she anticipates that more students will seek federal loans in the future.

"The trend in the last few years has been that more and more students have begun applying for loans. The cost of an education is increasing nationwide and government grant funds have not increased in proportion to the rate of inflation.

"The gap is widening in what an education costs and what students can pay."