UW has lowest Perkins default rate

UW–Madison has the lowest default rate for the Perkins Loan among the top 100 colleges and universities that participate in the federal student aid program.

UW–Madison’s default rate on the federal student loan was 1 percent during the 1999-2000 academic year, according to the January 2001 issue of The Greentree Gazette, a magazine that covers the business of higher education.

“The reason we are No. 1 is simple — our former students repay their Perkins student loans better than the alumni of any other school (in the top 100 by loan volume) in the country,” says Steve Van Ess, director of the university’s Office of Student Financial Services.

The magazine reviewed the top 100 colleges and universities with the highest Perkins Loan volume in the country. UW–Madison ranked 8th in total loan volume, with $7.9 million in Perkins Loans distributed last year.

Funding for the Perkins Loan is provided by the federal government. Institutions of higher education loan out the money and collect the payments.

Van Ess credits the high repayment rate to the fact that UW–Madison students generally do well in their studies and find meaningful employment upon graduation. He also praises his office’s student loan servicing unit and the Bursar’s Office for what he describes as an “excellent job” of billing and collecting on Perkins Loans after students leave the university.

“The Bursar’s Office and the student loan servicing unit of Student Financial Services work hard to maintain good communications with borrowers,” says Cathie Hanlon, university bursar. “This effort pays off in helping students understand the importance of staying current on their loan repayments.”

Achieving a low default rate is important for postsecondary educational institutions, Van Ess says, as it is one of the measures the U.S. government uses to determine whether a school will be allowed to continue to participate in federal financial aid programs.

A low Perkins Loan default rate is especially important in that the program is actually a revolving loan fund where all collected dollars remain on campus to be loaned again to future students, Van Ess says.

“Having a 1-percent default rate at UW–Madison provides maximum loan dollars for the students of tomorrow,” Van Ess says. “For example, the university received only $3,000 in new federal Perkins Loan dollars last year. The rest of our loan dollars came from student loan repayments.”

The Office of Student Financial Services says 4,675 UW–Madison students received Perkins Loans last year, with amounts averaging $1,562.

Rounding out the top 10 institutions with the lowest default rates are the University of Puget Sound, 1.21 percent; Brown University, 1.71 percent; Northwestern University, 1.74 percent; Stanford University, 1.98 percent; Cornell University, 2 percent; Harvard University, 2.16 percent; University of Maryland-Baltimore, 2.17 percent; UCLA, 2.36 percent; Dartmouth College, 2.39 percent.

For the 1998-99 academic year, UW–Madison posted the third-lowest Perkins Loan default rate in the nation, at 1.77 percent.