More Alaska students defaulting on loans

FAIRBANKS - The rate of Alaskans defaulting on student loans rose to 8.3 percent in fiscal year 2007, 12th-highest in the nation, according to a U.S. Department of Education report.

The state's three public campuses all saw defaults increase from 2005, when the rate was 5.8 percent.

The 2005-07 span offers the most recent snapshot because borrowers often remain in school for several years or take advantage of a grace period before paying back their loans, said Deanna Dieringer, director of financial aid at the University of Alaska Fairbanks.

Federal loan programs tighten if the default rate at a college or university hits 10 percent, Dieringer said. Once that benchmark is reached, students attending those schools have more highly managed loans, which require payment plans and more paperwork for universities. The Fairbanks campus briefly hit a double-digit default rate in the early 1990s and it caused significant headaches, she said.

In a press release announcing the rising default rates, U.S. Education Secretary Arne Duncan attributed them to the tough economic times.

Dieringer said UAF steers students toward federal loans first, since they typically have the lowest interest rates. Some of the other options, which include state and alternative loans, have put tougher lending requirements in place in the past year.