Graduates from these colleges are keeping up with their student loans best

KEY TAKEAWAYS

• An increasingly large number of federal student loan borrowers have fallen behind on their payments.
• However, at some higher education institutions, the majority of graduates are doing well.
• Students who complete their degrees and earn high incomes post-graduation tend to have an easier time paying off their student loans.

More federal student loan borrowers are struggling with their payments right now, but graduates from certain schools are faring better than others.

There are currently 42.6 million federal student loan borrowers, and only about a third are in repayment, according to the latest Department of Education records. About 30% of borrowers are delinquent (30 to 270 days past due) or in default (271 or more days past due), and the remaining are in a deferment or forbearance.

While borrowers from many colleges are struggling with their payments, at some institutions, only 1% to 3% of their former students are in non-payment. The nonpayment rate by institution, tracked by the Department of Education, measures the number of federal student loan borrowers who entered repayment since January 2020, and are more than 90 days behind on their payments.

Why This Matters

Good universities can propel its students towards high-income jobs, which make it easier to pay off student loans, and provide a better return on their investment.

*Note: Investopedia removed some of the outliers in the data set, such as excluding any institution with a total borrower count below 5,000.

Midwestern University, also called MWU, is a graduate medical program and has the lowest nonpayment rate among the observed higher education institutions, with only 1% of its borrowers behind on their federal student loans.

In addition to federal student loans, MWU offers its own non-profit loan program. Over the past decade, about 5% of MWU’s students borrowed through the university’s loan program, Gregory O’Coyne, vice president of enrollment and financial strategy at Midwestern University, said. The average student who borrowed an MWU loan still took out federal student loans for about 40% of their educational costs, and the default rate on MWU loans over the past decade was 0.08%, said O’Coyne.

The university also said it adjusted parts of its loan programs in response to recent federal student loan changes, such as informing its graduates of changes to repayment plans and expanding its loan offerings after the elimination of the Graduate PLUS loan this year.

“[Midwestern University’s programs] are concentrated in healthcare fields with strong employment demand and competitive compensation, supporting graduates’ ability to repay,” O’Coyne said in an email. “MWU provides robust, ongoing financial education...including one-on-one counseling, financial planning tools, and targeted communications that promote responsible borrowing throughout a student’s academic career.”

Student loan borrowers typically have an easier time repaying their loans and receive a better return on their investment if they graduate into higher-income fields.

For example, although medical students tend to borrow more student loans than other college students, the degree tends to pay off. The median healthcare worker aged 25–54 with a graduate degree makes about $152,000. That is more than the median worker with a bachelor’s degree or a non-healthcare-related graduate degree, according to a recent report from Georgetown University.

Six of the listed institutions focus solely on the highly lucrative medical graduate degrees, and all but the University of Notre Dame offer a graduate medical program.

In addition, students who complete some college but do not receive a bachelor’s degree tend to have a harder time paying off their student loans.

Across all higher education institutions, the graduation rate for bachelor’s programs is 64%, according to the latest data from the National Center for Education Statistics. Among colleges with the best nonpayment rates, the graduation rates were about 20 to 30 percentage points higher than the national rate.

Read the original article on Investopedia