Penn graduates unlikely to default on loans

An increasing number of students find themselves graduating from college with thousands of dollars of student loan debt, and the difficulty many face in finding well-paying jobs after graduation leaves many wondering how they will pay off their debt. Fortunately for Penn students, though, they are much less likely to default on their loans than the typical college graduate.

Penn’s loan default rate for undergraduate students is roughly 1.1 percent, meaning that almost all Penn students remain current on their loans. The national average, meanwhile, is roughly over 10 percent. This means that Penn students aren't affected by the national debt crisis the way most college students are, says Marlene Bruno, Director of Communications for Student Registration and Financial Services.

“So what that tells us is that Penn students are able to manage the debt that they have,” Bruno said, noting that the average debt for students that graduated in May 2015 was approximately $18,911. “Only one-third of the class borrowed. And every year the number of borrowers has been going down.”

From 2008 to 2015, despite the rising costs of attendance, Penn has seen fewer students borrowing and a decreasing sum of money borrowed.

Bruno emphasized that Penn is trying to help prevent the amount of debt after school, which is why Penn President Amy Gutmann has spearheaded Penn’s all-grant financial aid campaign. Gutmann herself often refers to her own financial aid assistance, which allowed her to study at Radcliffe College.

When new students are accepted to Penn, SFS sends out a pamphlet to show them payment options and teach them about the all-grant aid program. For students that choose to take out loans, many do so in order to cover their family’s contribution. Some students choose to take on their parents’ loans when they graduate.

“Obviously there are people reading it because less people are borrowing,” Bruno said of the pamphlet.

Bruno addressed the difference between Penn and other schools by explaining how for-profit schools or tech schools may have lower graduation rates, while Penn’s retention rate is upward of approximately 96 percent. As a result, more students complete their studies at Penn and are able to start a good career.

In the years following graduation, students’ salaries and debt become very manageable, Bruno says. But doesn’t mean that parents don’t borrow money to support their child’s Penn education. When SFS calculates students’ financial aid packages, they subtract the family’s expected contribution from total cost of attendance to get each student’s total financial need.

“I’m not saying that it doesn’t exist; I do believe that there is a crisis for many young people who are graduating,” Bruno said. “To combine that fact that the debt is higher, with the fact that employment hasn’t been very strong in the past few years, those two combinations can make it very difficult.”

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