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Default Rate Increases for Gateway Students, Among Highest in Kentucky

The United States Department of Education released its annual report on default rates among higher education students and it shows that Gateway Community & Technical College has experienced an increase in defaults.

Gateway now stands at a 32.5% default rate, according to the federal figures, placing it near the top in Kentucky.

"Gateway is not satisfied with the 2011 default rate and will do more to help students understand the ramifications of borrowing more than they need to maintain their progress to a certificate, diploma, or degree," said Dr. Ed Hughes, president & CEO at Gateway, in a report published by the college in response to the numbers. Hughes said that Gateway intends to implement the default management plan including additional best practices, seek the assistance of third-party experts who utilize strategies for locating students who have left the institution years ago but who still need to begin repayment, and work with policy makers to find ways to include the credit worthiness of the borrower as a critical factor in determining the approval of a loan as well as the loan amount.

"Gateway will continue to follow its mission to increase access to high quality, cost-effective postsecondary education for the citizens of the region through the three campuses that are spread across Northern Kentucky," Hughes said. That will include the expansion of access through online programs that encourage students to participate in learning all day, a focus on cost-effective pathways that begin at Gateway and end at 4-year universities, expanding industry-recognized training to current workers, and increasing scholarships.
Across the country, the national three-year federal student loan cohort default rate has declined to 13.7 percent for students who entered repayment in Fiscal Year 2011. That drop is represented in all sectors of higher education, the Department of Education announced, including public, private, and for-profit institutions. The rate was 14.7% in 2010.
“While it’s good news that the default rate decreased from last year, the number of students who default on their federal student loans is still too high, and we remain committed to working with postsecondary education institutions and borrowers to ensure that student debt is manageable,” said Secretary of Education Arne Duncan. “The Department will continue our efforts to help borrowers by providing more flexible repayment options and better counseling and information. We will also continue working with institutions to ensure they are providing their students with the information and guidance the students need to repay their loans after they graduate.”
In Kentucky, Gateway ranks among the highest in its default rate, meaning that students failed to start making payments on their federal loans after two years had passed. Gateway is part of the Kentucky Community & Technical College System (KCTCS). The schools break down with these rates:
Somerset 33.3 (Down from 33.4 in 2010)
Gateway 32.5 (Up from 29.3 in 2010)
Southcentral 32.1 (Up from 25.2 in 2010)
Hazard 31.6 (Down from 34.4 in 2010)
Maysville 30.9 (Up from 26.4 in 2010)
Big Sandy 29.6 (Down from 31 in 2010)
Ashland 28.6 (Down from 30.3 in 2010)
Southeast 28.4 (Up from 25.9 in 2010)
Elizabethtown 28.3 (Up from 26.9 in 2010)
Owensboro 25.6 (Up from 25.1 in 2010)
Bluegrass 25.2 (Down from 25.5 in 2010)
Jefferson 24.7 (Up from 23.2 in 2010)
West Kentucky 23.3 (Up from 18.8 in 2010)
Henderson 22.5 (Up from 20 in 2010)
Madisonville 18.9 (Down from 20.2 in 2010)
Hopkinsville 17.7 (Down from 21.8 in 2010)
Prior to the federal report's release, The Chronicle of Higher Education predicted that community colleges should be concerned, noting that the default rate nationally has increased for them from 13% to 21% over the past three years, and that up to three dozen community colleges could be in trouble of losing their elgibility to access federal loans.
4-year schools perform better. Northern Kentucky University has a default rate of 9.9% in 2011, down from 11.5 in 2010. Thomas More College's default rate is 7.3, down from 8.7 n 2010.
Hughes said that some of the nation's top community colleges have now exceeded the 30% threshold. "Like Gateway, they are mission-driven to extend access to everyone in the community," Hughes said. "Unfortunately, the Cohort Default Rate disproportionately impacts community and technical colleges like Gateway because we serve a disproportionately higher rate of students from financially challenged situations. We exist partly to give hope to those who are shut out of other types of post-secondary education."
Gateway Board of Directors Chairman Jeff Groob declined to comment when reached Wednesday.
Hughes emphasized that Gateway is not facing sanctions and will continue to accept students who utilize federal aid. For Gateway, the 32.9% represents 395 students out of 1,595 who received loans through one or both of the federal loan programs and have not begun repayment. Those students were enrolled over five years ago, in 2008-09, and took out the loans during that academic year.
"The good news is that nearly 70% of Gateway student borrowers that year met their obligation to repay their loans," Hughes said. "Many of the individuals in default are facing financial crises and are simply unable to begin repayment now and may begin repayment later. A small percentage of those students in default are 'scamming the system'."
To search the defaul rates of schools by location, click here.
Written by Michael Monks, editor & publisher of The River City News
Photo: Gateway Urban Center in Covington/RCN file
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