STUDENT LOAN DEFAULT RATES DECLINE AT AREA INSTITUTIONS

Stage One The Hair School in Cape Girardeau showed a dramatic turnaround in federal loan default rates.

The student default rate of 6.1 percent in Fiscal 1992 was down from 32.7 percent the year before, according to figures released Thursday.

The Cape Girardeau Area Vo-Tech School and Southeast Missouri State University decreased their rates for the third consecutive year.

"We are very proud of that drop," said Susan Koepp, Stage One director. But she did question how the government rates a school on its default rate.

"The government judges your administrative capabilities according to your default rate," Koepp said. "We don't think that is equal. You have people who are really successful and they still won't pay their bills."

The hair school is making fewer student loans as a result of government restrictions, Koepp said.

Art Wallhausen, assistant to the president at Southeast, said the university is pleased the rate has dropped below the double digit mark to 9.9 percent. The rates for the two previous fiscal years were 13.2 and 14.9 percent, respectively.

"That's certainly going in the right direction," Wallhausen. "We would like to have it at zero, but that won't ever happen."

He said the government requires institutions provide mandatory entrance counseling for all new borrowers.

"Students asking for loans now clearly understand that they are loans, not grants," Wallhausen said.

Wallhausen also said the university's more selective admissions policy helps its rate since loan defaults are higher at institutions with open access to enrollment. An improving economy may allow more former students to find jobs and repay their loands.

In the state's fiscal year that ended June 30, the university processed $9.7 million in federal loans. That was part of $20 million total in financial aid processed by the university in the past year.

Harold Tilley, director of the Cape Girardeau Area Vo-Tech School, is proud of the school's 7.7 default rate excellent.

"We're trying to do better. We feel as if the diligence we are exercising with our graduates is paying off," Tilley said.

The vo-tech school works with potential students to seek training in fields where they are jobs. The school is also very diligent in reminding students that the money is a loan that must be repaid, he said.

The only local institution close to the 20 percent mark, which would call for restrictive measures, is Metro Business College with a 19.3 percent default rate.

Director Mary Emmendorfer was unavailable for comment.