Editor's note:This story's headline corrects a previous version by now stating that Owens had the fifth-most student loan defaults among public institutions, not the fifth-highest student default rate among all schools. It also clarifies that the relative rankings for student defaults at the University of Toledo and Bowling Green State University were for public schools only, and that those schools were in the top 10 percent of public schools for defaults.
The number of students who defaulted on loans they took out to attend area public colleges and universities has increased sharply as the economy struggled in recent years, pushing one Toledo school near the top of the national list for defaults.
Owens Community College had the fifth-most defaults on federal student loans among the nearly 1,800 public institutions during the fiscal year 2009, the most recent for which the U.S. Department of Education has data available. The 557 students who defaulted during that year were more than double the number of two years before, as jobs became scarcer, especially for new graduates.
The education department, which tracks student defaults, sanctions schools based on default rates, not raw numbers. Owens officials were surprised when they learned they ranked so high.
BY THE NUMBERS
Owens Community College had the fifth most defaults for public schools at 557 students.
The University of Phoenix had more than 35,000 defaults, by far the most of all schools.
University of Toledo's 297 defaults ranked 64th for public schools.
Bowling Green State University was 124th with 228 defaults.
It doesn't appear that huge debt burdens caused by high tuition rates were a leading cause of the spike in defaults. Owens is a relatively inexpensive higher education option, with tuition about $4,000 a year. And of the 20 public schools with the most defaults, nearly half were community or technical colleges.
Betsy Johnson, director of enrollment services at Owens, said many of the students who default on loans didn't graduate and find themselves in a financial hole.
"It's honestly a direct relation back to the economy," Ms. Johnson said. "At a time when people are trying to go back into repayment on a loan, they are also finding that they may not have a job or can't pay rent."
It's not Owens' tuition that causes most students to default, she said.
About 75 percent of those who defaulted on their loans in the fiscal year 2009 had federal grants that covered their entire tuition.
The loans they couldn't or wouldn't pay were taken out to cover such expenses as housing and transportation.
Schools don't determine how much a student can borrow for his or her education. The federal government does that. All schools can do is try to educate students about the potential consequences of borrowing too much and about how much income they can expect to make and how much they can expect to owe when they graduate.
For instance, Owens offers first-year courses that cover financial education. All students who receive federal financial aid are given entry and exit interviews to discuss future costs and expected monthly loan payments.
When students become delinquent on their loans, Owens officials send letters in handwritten envelopes that explain options for catching up on payments.
That Owens and other two-year schools had so many defaults compared with other public institutions doesn't surprise David Deming, a professor in the Harvard University graduate school of education. He said the correlation has more to do with the type of students who attend community colleges than those schools' practices; comparisons between public community colleges and universities aren't apples to apples.
Mr. Deming said that although the sometimes staggering debt loads of a few students get more publicity, a large proportion of defaults is on small loan amounts.
Loan defaults are more common among students who are financially independent, he said, and those students are more common at two-year institutions compared with four-year universities, where parents often help pay loans.
"They are much more financially precarious," Mr. Deming said of financially independent students.
And when an economy is depressed, those students who don't have family help paying loans and who can't find jobs are primed to default.
"If you don't have a job, you wouldn't be able to pay off even a small loan," Mr. Deming said.
To be clear, the numbers of student default at Owens and other public schools are dwarfed by those at many for-profit schools, which have come under scrutiny by the federal government over their loan practices. Some of the for-profits' defaults are downright alarming.
The University of Phoenix had more than 35,000 defaults starting fiscal year 2009, by far the most of any U.S. higher-education institution. That school had about as many student defaults as the top 100 public colleges or universities combined.
Northwest Ohio's sluggish economy appears to have affected students at other area public colleges and universities.
Others were high on the list for student defaults among public schools. The University of Toledo's 297 defaults ranked 64th, and Bowling Green State University was at 124th with 228 defaults. Both universities were ranked in the top 10 percent in the nation.
Sherri Jiannuzzi, UT's assistant director of financial aid, noted that as with Owens, the rate of student loan defaults at the university was well below what the Education Department determines is sanction level. At the same time that more students are being told that they need college degrees — and the subsequent debt — to find meaningful work, the tight job market in the United States and northwest Ohio in particular leaves even graduates struggling to make enough to pay off their loans. In worse shape are those who have to drop out, either because of poor grades or financial stress.
"With this economy, they just can't continue on," Ms. Jiannuzzi said, "and then they are left with a debt while they were hoping to have a much better-paying job."
Contact Nolan Rosenkrans at: firstname.lastname@example.org or 419-724-6086.