Allen College Students' Loan Default Rate Much Lower Than State and National Averages

March 1, 2013

Three years after they started paying back their loans, only 1.4  percent of Allen College’s graduates and former students defaulted on their loans according to figures released by the U.S. Department of Education.  Allen College’s three-year default rate is significantly lower than the 13.4% national average default rate. The government’s figures also show that Iowa’s three-year default rate average was 16.6%, among the highest in the nation, surpassed only by Oklahoma (17.3%),  and Arkansas (17.5%) and Arizona (22.9%). The U.S. Education Department default rates were based on borrowers who  repaid loans starting on October 1, 2008 through Sept. 30, 2011. More than one in eight of those student loan borrowers defaulted within three years. For-profit institutions had the highest average three-year default rates, at 22.7 percent, which was more than double the 11 percent rate among public institutions. Private, nonprofit institutions like Allen College had an average three-year default rate of 7.5 percent.

Allen College chancellor Dr. Jerry Durham attributed the low default rate to the College’s ability to attract high-achieving students who are likely to find jobs after graduation in the expanding health care industry.   Durham also said that Allen College’s debt management counseling for any students with  loans played a role in students’ understanding of their obligations to repay these loans.

Recent estimates show that two-thirds of American college seniors who graduated in 2011 had student loan debt, with an average of $26,600 for those with loans. The average loan debt incurred while attending Allen College as a full time student and graduating in 2011 was $22,600.  Because of this debt trend, Allen College has been increasing the amount of financial aid provided, said Kathie Aswegan, coordinator of Financial Aid. The College offered more than $600,000 in the form of institutional scholarships in 2011-12, Aswegan said. These scholarships were provided by donors, augmented by institutional aid that has steadily increased over the past two years.  In addition, many undergraduate Iowa residents attending Allen College qualified for an Iowa Tuition Grant (ITG).  In the 2011-12 academic year,  270 of Allen College’s undergraduate students received an ITG grant averaging $3,500.   

In addition, according to Chancellor Durham, earning a four-year college degree still provides an excellent return on investment.  A late 2012 report from the State Higher Education Executive Officers concluded  that, despite substantial variations across states and disciplines, “Postsecondary degree attainment clearly results in higher earnings for the vast majority of individuals in all 50 states…almost without exception, each successive level of higher-educational attainment yields additional economic benefits.”  The report found individuals who complete a bachelor’s degree have a median income of $50,360, compared with a median of $29,423 for people with only a high-school diploma. Those with an associate degree earn some $9,000 more than those with only a high-school diploma. Those with a graduate degree have a median income of $68,064, about one-third more than those with a bachelor’s degree.

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