Presidential contenders' increasing talk of alleviating the massive U.S. college student debt burden has outsize implications for West Virginia - which has, according to the latest federal data, the country's third-highest default rate on federal student loans.
Nearly 6,700, or 18.2 percent, of the Mountain State's roughly 36,700 students who entered repayment in federal fiscal year 2010-11 had defaulted before the Oct. 1, 2013, start of last fiscal year - 4.5 percentage points higher than the national rate.
Only Arizona, at 18.4 percent, and New Mexico, at 20.8 percent, had higher default rates. Nebraska, at 7.7 percent, and North Dakota, at 6.1 percent, had the lowest among the 50 states. West Virginia Higher Education Policy Commission officials said Monday they expect the U.S. Department of Education to release updated numbers next month.
Last week, Hillary Clinton, whom polls consider the front-runner in the Democratic presidential primary, unveiled a decade-long, $350 billion plan that, according to her website, will be fully funded by "limiting certain tax expenditures for high-income taxpayers." To address what she says is $1.2 trillion in debt burdening 40 million Americans, the plan would, among other things, "significantly" cut interest rates on federal student loans, allow borrowers with high interest rates to refinance at the current loan rate, ensure borrowers will never have to pay more than 10 percent of income and allow loans to be forgiven after two decades.
Clinton's plan would also funnel grants to states and colleges to keep future students from having to take out loans. Every West Virginia public four-year college raised tuition for this academic year, as the state has continued to cut higher education spending.
Clinton's Democratic rivals have also addressed the issue. U.S. Sen. Bernie Sanders of Vermont introduced a bill that would nearly halve undergraduate student interest rates and eliminate tuition and fees at four-year public colleges and universities. Two-thirds of the roughly $70-billion-a-year plan would be funded by the federal government by imposing a tax on Wall Street speculation, and one-third would be funded by the states. The New York Times has reported that Republican candidates are also in on the issue, with Ohio Gov. John Kasich planning to "replicate programs in his state that have held down the price of tuition."
The average student who graduated from a West Virginia public four-year school in the 2012-13 academic year, the latest for which the HEPC has reported data, had accumulated $31,100 in debt from both public and private loans while pursuing a bachelor's degree. That number -- which dropped 13.4 percent from the previous academic year and is only up half a percent from 2008-09 -- only included those students who had loans.
The most recently reported three-year federal loan default rate for the Mountain State's public four-year colleges was about 14 percent. More than a quarter of Bluefield State College students who entered repayment in federal fiscal year 2010-11 defaulted before last fiscal year, as had more than a fifth of all Glenville State College students. About 18 percent of West Liberty University students had defaulted, as had 17.3 percent of Concord University students and 17 percent of Fairmont State University students.
According to the most recent HEPC data, 76.5 percent of West Liberty undergraduates receive federal loans, the highest among public four-year colleges. Glenville State students were second, at 76 percent, followed by Fairmont State, at 64 percent, Concord, at 61 percent, Marshall University, at 60.2 percent, and Bluefield State, at 60 percent.
An April report by the Brookings Institution, a Washington, D.C.-based think tank, found that other than West Virginia University and WVU Tech, every public four-year college in West Virginia has a higher student loan default rate than would be expected for roughly similar colleges accepting similar students. Among four-year colleges, WVU Tech ranked in the 75th percentile, so only a quarter of schools did better. WVU was in the 28th percentile, so 72 percent did better. No other schools had loan repayment rates above the 20th percentile, and four - Bluefield State, Concord, Fairmont State and West Liberty - were in the 5th percentile or below.
According to the HEPC, one West Virginia private four-year university had a higher loan default rate than all other four-year schools of any type: Salem International University, at 27.6 percent. The HEPC has previously hesitated to reauthorize Salem to offer degrees in West Virginia, though it did so again in May. The Future Generations Graduate School, with a 2013 headcount of only 51 students, was the only institution to not report its default rate to the HEPC.
The latest data from the state Community and Technical College System shows that, among public schools, only at BridgeValley and Pierpont community colleges did 50 percent or more of undergraduate students receive federal loans, while all public four-year colleges that reported data said over half their undergraduates did.
But public community colleges had much higher default rates than the four-years, with no default rate below 20 percent. Brian Weingart, senior director of financial aid for both the HEPC and the CTCS, said the overall federal loan default rate for public two-year colleges was 33 percent.
About a quarter of all students at Blue Ridge, BridgeValley, Eastern West Virginia and Southern West Virginia community colleges defaulted before the start of last fiscal year. About 30.5 percent did at WVU at Parkersburg. And more than a third did at Mountwest, New River, Pierpont and West Virginia Northern, with New River's the highest at nearly 40 percent.
Sarah Tucker, the CTCS' interim chancellor, said that because relatively low percentages of community college students receive federal loans, the "default rate number hinges sometimes on a couple of students." She also noted the default rate measures students who left state institutions years ago, and doesn't account for efforts the HEPC and CTCS have more recently started to solve the problem.
The systems contracted with two companies in fall 2013 -- EdFinancial and Inceptia -- to which schools can send information about students who defaulted so the companies can offer help with repayment.
"They've made a huge, huge impact," Tucker said.
Weingart noted workshops with colleges about default rates and events where representatives attend high schools to talk about higher education borrowing. He said the HEPC and CTCS are still trying to uncover the underlying reasons for West Virginia's high default rate, noting the spike in defaults came after the recession and student data from that time is just now being reported.
He said reports by the Federal Reserve Bank of New York indicate that many individuals applied for federal student aid around the recession just to receive the money, without actually intending to get an education -- the Fed found people who were likely to go into debt were in their 30s and had a loan amount less than $5,000, indicating the person was in school one year and left.
"It impacts, many times, the schools that have lower tuition rates, because they would get more money back because the financial aid isn't going toward tuition and fees," Weingart said.
He said that schools are often frustrated by the overall default rate issue because they can't limit how much students borrow from the federal government, nor can they require students to go through loan counseling each year. The HEPC's current master plan has a goal of lowering the default rate to 9 percent by the 2018-19 academic year.
Reach Ryan Quinn at ryan.quinn@wvgazette.com, 304-348-1254 or follow @RyanEQuinn on Twitter.