CHARLESTON -- Lenders who gambled that students attending the West Virginia School of Osteopathic Medicine would repay their college loans are now putting money in the bank.
Graduates of the medical school in Lewisburg had a zero default rate in 1997 and 1998, according to figures released this week by the U.S. Department of Education in Washington.
"Unlike many undergraduate institutions, we are graduating primary care physicians that are employable," said Sharon Howard, the school's financial aid director. "There is great demand out there and our graduates are able to get jobs where they can repay their loan obligations."
The school also uses student counseling to teach the repercussions of defaulting on loans that average about $104,000 per graduate.
"They can have their wages garnished, lose their income tax refunds and their Medicare and Medicaid payments," Howard said.
The national rate of college students who failed to repay their loans on time was 6.9 percent in 1998, down from 8.8 percent in 1997.
Overall, colleges in West Virginia averaged an 8 percent default rate in 1998. The rate decreased slightly to 7.8 percent when loans to students attending vocational schools were included.
Nine West Virginia colleges, including the osteopathic school, had rates below the national average:
Bethany, 4 percent; Concord, 6.4; Ohio Valley, 4.6; Shepherd, 5.2; University of Charleston, 6.2; West Virginia University, 3.9; West Virginia Wesleyan, 4.9; and Wheeling Jesuit, 4.3.
"Increased student loan counseling is what's made a significant difference," said Ken Sears, WVU's associate director of financial aid. "We're also working with new students in the residence halls during the evenings on managing their student loans and credit card debt. We don't take for granted that new students come to us with those skills."
Sears said WVU hopes its counseling program eventually will reduce the student loan default rate to less than 1 percent.
Student loans rose dramatically after 1992, when Congress made them easier to get, raised annual limits and created a new unsubsidized loan program.
Since then, the number of West Virginia college students receiving financial aid, including loans, has risen to about 71 percent, according to the West Virginia Higher Education Policy Commission.
U.S. Secretary of Education Richard Riley attributed the ongoing decline to a robust economy that has all but missed West Virginia.
In the southern coalfields, Southern West Virginia Community College has the highest loan default rate of any college in the state at 13.8 percent, down from 17.3 in 1997.
"The economy is improving and there are more jobs out there to help them pay back the loans, but the growth has been very slow here in southern West Virginia," said financial aid manager Cindy Whitlock. "We have put a lot of effort into our default management plan and are seeing improvements."
Not all schools in southern West Virginia were above the national rate. Concord College in Athens cut its default rate by about a third from 9.5 in 1997 to 6.4 in 1998.
"We have been able to recruit better students," said Michael Curry, vice president for admissions and financial aid. "Better students tend to have a greater understanding of their loan commitments. Students who are less prepared are going to default more than better prepared students."
Institutions who failed to decrease their default rates face serious implications that can jeopardize federally funded programs, Curry said.
Some 850 schools nationwide have lost student loan program eligibility since 1993 because of bad loans.