Economic uncertainties, a diminishing job market and rising tuition costs are being blamed for the second student loan default rate in 10 years this year, according to the U.S. Department of Education.
Default rates - the proportion of students failing to repay their college loans on time - rose nationally to 5.4 percent for students who took out their loans in 1998, compared to last year's rate of 5.1 percent.
UNM is reporting a higher than average 7.8 percent student default average, though Ron Martinez, director of financial aid at the University, said most students are educated about the loan payment system and are punctual when it comes to repaying their debt.
He could not provide an average student loan debt for UNM students, but said it is well below the national average of $19,000.
Martinez said students are considered in default of their loans a year to the day after they either graduate or leave UNM. Everyone who takes out a loan is given a 6-month grace period to get on their feet before having to begin thinking about payment options, he said.
Most students, Martinez said, are unable to repay their loans because they are either unemployed or underemployed within the first year of leaving college.
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"There are always those who have no intention of repaying their loans, but for the most part the system works very well and the students do their part," he said.
Martinez said another factor contributing to many students not being able to pay back their student loans is credit card debt.
According to the Chronicle of Higher Education, more than 55 percent of college students are in credit card debt. The average debt for college students is $3,500.
"Most students leave college with very moderate amounts of loan debt," Martinez said. "But when you couple that with a large amount of credit card debt, it's easy to see how things can get out of hand."
Many students realize the importance of student loans as a way of financing their college careers, but are aware of the dangers associated with them.
UNM freshman Jennifer Hunt said she feels trapped, having to inevitably rely on loans to pay her tuition only to work for several years after graduation to repay the debt.
"It's kind of depressing knowing that I'm going to be putting myself in debt," Hunt said. "I know it is worth it in the end, but it just seems like a daunting process."
Martinez said UNM has several programs in place to help reduce the incident rate of students defaulting on their loans.
Direct student loans, the University's most popular student loan, allows the Financial Aid office to track students who are nearing the year limit to begin repaying their debt.
When this happens, he said, the office attempts to contact the person to let them know about the dangers associated with becoming default on their loan and ways to avoid it.
"Having to deal with credit agencies and bad credit is not fun and can have serious impacts on a person's future," Martinez said.
He said before students graduate the office offers them exit counseling to educate them about their individual situation and offer helpful advice about repaying their loans.
While the program is "an invaluable tool," Martinez said many students don't take advantage of the opportunity.
"The best advice I can offer is to take advantage of these programs while they are available to you," he said. "They really can make your life easier in the future."
