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SD Public Universities Give Best Bang for Borrowed Bucks

The December Board of Regents meeting (beginning tonight in Rapid City with dinner and executive session on personnel matters) includes a panel discussion Thursday afternoon on student debt and financial aid. The panel's agenda summary provides some insight on student loan default rates in South Dakota.

As usual, South Dakota's graduates default on their student loans less frequently than the national average. Looking at the three-year average over 2007, 2008, and 2009, South Dakota's default rate on student loans was 4.9%, compared to a national rate of 7.5%. That ranks us tenth-best in the nation.

Institution Type 2007-9 average student loan default rate
Private 4.5%
Proprietary 10.3%
Technical 5.0%
Regental 2.9%
All Types 4.9%

Now break down the default rates by type of instution. Students graduating from proprietary institutions such as National American University are the most likely to default on their loans, with a hair over one in ten falling too far behind on their payments. Vo-tech grads have the next highest rate, less than half the proprietary grads' rate, but still higher than either the private or public university rate. I find that a little surprising: just yesterday, I was noting to my Spearfish freshmen the possible merits of attending a technical institute, incurring less student debt, and being able to enter the workforce sooner to pay off those debts sooner. The higher default rate among vo-tech graduates suggests our welders, diesel mechanics, and med-techs may not be doing as well at landing jobs to pay back those student loans as their fancy-pants university pals.

Campus 2007-9 average student loan default rate
SDSU 1.9%
SDSMT 2.6%
USD 3.0%
DSU 3.2%
BHSU 3.9%
NSU 5.4%

Among the regental universities, SDSU appears to be providing the best chance of clearing one's student debt. Over the three-year period studied, SDSU grads had a student loan default rate of just 1.9%. Even those hard-headed practical engineers from Mines can't beat that rate; they come in second at 2.6%. At 5.4%, Northern grads have nearly three times as much chance of defaulting as their Brookings brethren. That suggests that SDSU students are either incurring less debt or landing better jobs that pay off their debts faster.

While South Dakota's student loan default rates compare favorably with the nation, our student loan status isn't all rosy. As reported here earlier, South Dakota has the highest percentage in the nation of students graduating with debt. The Regents note another bothersome statistic:

South Dakota's historical borrowing-to-credential ratios do not compare favorably to those of most other states. Combining data from 2006-07 through 2008-09, South Dakota's borrowing-to-credential ratio for public institutions is $19,969, a figure that ranks 6th highest in the country, and nearly doubles the national figure of $11,553 [South Dakota Board of Regents Student Debt and Financial Aid Panel, Agenda Item N, December 15-16, 2011].

That stat suggests our students are incurring more debt per degree. To obtain the primary tangible deliverable of our university system, South Dakota students are having to incur more debt than a large majority of the counterparts nationwide. That suggests our Legislature needs to find a way to restore the state's support for higher education, support that has steadily eroded since the Janklow administration.

p.s.: Not included in the BOR student debt discussion: Congresswoman Kristi Noem's clueless and asinine suggestion that students cut their debt by staying home and taking online classes.


  1. twu 2011.12.14

    Working on a college campus (though at this point not within the SD borders), I find this information really interesting. Be careful, though, not to lean too hard on loan default rates as an indicator of getting--or not getting--well-paying jobs (as in your surprise at the Technical to Four-Year comparison in default rates). Keep in mind that, unfortunately, the current system of higher education funding does not guarantee that access to each of the categories broken down in this survey is available to potential students of every socioeconomic status; grants and loans go a long way, yes, but some students quite simply can't pay for the cost of a small, private liberal arts school, financial assistance or no. I would make the case that there's probably something at play in the student demographics at each type of institution that influences each category's default rates, setting some outcomes up before a single tuition bill has been paid or a single job application has gone out. Thus, it might not be that students leave one type of institution any better able to pay back loans than another type of institution. It could just be that the Regential institutions are a better "ability-to-pay" match between their student population and their comprehensive fee from the start.

  2. Steve Sibson 2011.12.14

    With "On-the-job" training, the working class don't have to go into debt in the first place. Cory, why are you defending the captalists' subsidized job training?

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