Online Colleges with the Lowest Student Loan Default Rates

Online Colleges with the Lowest Student Loan Default Rates - featured image

According to the College Board, 54% of bachelor’s degree holders from four-year public and private schools owed an average of $29,100. Many struggle with their student loan payments. 

Graduates from certain online colleges are able to pay their student loans promptly! Why look at student loan default rates when considering online colleges and universities?

  • A low default rate indicates that graduates had access to financial aid services. Their student loans were at manageable levels as a result. These are a key indicator of financial health among students and alumni.
  • Low default rates and better employment outcomes correlate. Graduates were likely able to secure well-paying positions. As a result, they were able to make loan repayments.
  • Low default rates show exceptional academic programs, student support services, and financial aid.
Online Colleges with the Lowest Student Loan Default Rates - fact

Consider these ten online colleges with low student loan default rates! The student loan default rates featured here are from Data USA, a free platform that collects US government data. The tuition and fees and median federal loan debt information are from US News & World Report.

Featured Programs

Rice University

Houston, TX

Website

Tuition and Fees: $58,128

Median Federal Loan Debt: $11,000

Student Loan Default Rate: 0% 

The Rice Investment, Rice University’s signature financial aid program, grants students full tuition and fees and room and board coverage, or full tuition coverage or half tuition coverage based on their families’ total income and assets. Students interested in the Rice Investment program should complete the financial aid application every academic year for consideration while also qualifying for federal, state and other institutional aid.

Its 0% default rate can also be attributed to the fact that Rice University meets 100% of its students’ demonstrated financial aid. In fact, freshmen students receive $58,740 in average need-based scholarships.

College of William and Mary

Williamsburg, VA

Website

Tuition and Fees: $25,041 (in-state); $48,841 (out-of-state)

Median Federal Loan Debt: $18,500

Student Loan Default Rate: 0.256%

William and Mary may have above-average tuition and fees for a public research university, but its generous financial aid packages contribute to its affordability. Of its freshman class, more than 40% receive need-based aid, with in-state freshmen students receiving a $27,426 aid offer on average. The result: Their tuition and fees are covered, not to mention that the college meets 82% of its students’ demonstrated financial need.

There’s also a five-year tuition freeze and in-state, Pell-eligible students getting automatic scholarship assistance that will cover their tuition and fees, at least.

University of Michigan – Ann Arbor

Ann Arbor, MI

Website

Tuition and Fees: $17,786 (in-state); $57,273 (out-of-state)

Median Federal Loan Debt: $19,500

Student Loan Default Rate: 0.287%

Freshmen students at Michigan are awarded $19,514 in average need-based financial aid, while Michigan itself meets 90% of its students’ demonstrated financial need. The combination means students and graduates aren’t burdened with overwhelming debt and, thus, can focus on their studies or career advancement, respectively.

UM Ann Arbor also offers its Go Blue Guarantee, which makes college education more affordable for Michigan residents. The financial aid package can include tuition and mandatory fees, at least. Residency, income and asset limits, and grade requirements apply.

University of Wisconsin – Madison

Madison, WI

Website

Tuition and Fees: $11,205 (in-state); $40,603 (out-of-state)

Median Federal Loan Debt: $20,484

Student Loan Default Rate: 0.289%

UW Madison awards $18,836 in average need-based financial aid for freshman students and meets 81% of their students’ demonstrated financial needs. When combined with its affordable tuition and fees, students and graduates can lessen their need for student loans.

Students must complete the FAFSA form and submit it on time to be considered for the wide range of UW Madison’s financial aid options, including:

  • Bucky’s Tuition Promise
  • Bucky’s Pell Pathway
  • Wisconsin Tribal Educational Promise
  • Badger Promise
  • BANNER

Boston University

Boston, MA

Website

Tuition and Fees: $65,168

Median Federal Loan Debt: $23,250

Student Loan Default Rate: 0.582%

For a private research university with among the highest tuition and fees, BU’s low default rate is impressive! This can be partly attributed to the $57,882 need-based financial aid awarded to freshman students and BU” ‘s track record of meeting 89% of its students’ demonstrated financial needs.

BU also has several financial aid options, including:

  • Tuition Exchange Program
  • Military tuition assistance
  • Merit-based scholarships for freshmen, upperclassmen and transfer students
  • Need-based scholarships like the BU Community Service Award

BU’s Prepaid Tuition Plan and Payment Plan also ease tuition and fee payments.

University of California – Irvine

Irvine, CA

Website

Tuition and Fees: $15,185 (in-state); $47,759 (out-of-state)

Median Federal Loan Debt: $15,000

Student Loan Default Rate: 0.639%

UC Irvine’s ability to meet 83% of its student’s demonstrated financial need is part of the reason for its low default rate. Students must complete and submit the FAFSA and the CADAA to start their financial aid journey.

Entering students can apply for the following:

  • UCI Distinguished Scholarships, namely, the Chancellor’s Excellence Scholarship and Regents’ Scholarship
  • UCI Campuswide Scholarships

Aside from federal aid, students can also apply for state aid like the California Chafee Grant for Foster Youth, the Middle-Class Scholarship, and the California Military Department GI Bill Award Program.

University of California-Los Angeles

Los Angeles, CA

Website

Tuition and Fees: $13,752 (in-state); $46,326 (out-of-state)

Median Federal Loan Debt: $14,000

Student Loan Default Rate: 0.759%

The combination of affordable tuition and fees and generous financial aid – UCLA meets 84% of its students’ demonstrated financial need – as well as the high employability of UCLA graduates contributes to its low default rate. Students must also file the FAFSA or CADAA forms to be considered for financial aid, including:

  • The Chancellor’s Blue and Gold Scholarship Program grants up to $5,000 in aid
  • The Regents Scholarship Program has a $2,000 grant award
  • Military scholarships
  • Californians For All College Corps

Students can also apply for low-interest university loans and the California DREAM ACT Loan Program.

University of Maryland

College Park, MD

Website

Tuition and Fees: $11,505 (in-state); $40,306 (out-of-state)

Median Federal Loan Debt: $19,000

Student Loan Default Rate: 0.798%

UMD also offers generous financial aid options for its students that contribute to their financial health while in college and after graduation, particularly manifesting as a low default rate. Aside from federal and state aid, students can also apply to the numerous UMD scholarship programs, including:

  • The Terrapin Commitment program bridges the gap between attendance costs and financial aid packages.
  • The Maryland Promise Scholarship Program makes UMD education more affordable.
  • The institutional merit-based scholarships recognize the achievements of students.

Check out the Maryland Higher Education Commission (MHEC) scholarships and grants, too.

University of Richmond

Richmond, VA

Website

Tuition and Fees: $62,600

Median Federal Loan Debt: $21,000

Student Loan Default Rate: 0.882%

Richmond makes it easier for its students to benefit from its top-notch liberal arts-centric education through a combination of a need-blind admission policy, a guarantee of meeting 100% of their student’s demonstrated financial aid, and scholarship programs. In fact, its average need-based financial aid package is nearly equal to its tuition and fees!

Scholarship programs include:

  • Richmond Scholars
  • Richmond’s Promise to Virginia
  • Presidential Scholarships
  • Virginia Tuition Assistance Grant
  • Merit scholarships, such as the full-ride Army ROTC Scholarships

California State University – Los Angeles

Los Angeles, CA

Website

Tuition and Fees: $6,814 (in-state); $17,388 (out-of-state)

Median Federal Loan Debt: $13,000

Student Loan Default Rate: 1.76%

Cal State LA offers more than 400 scholarship opportunities that enable students to decrease their need for student loans. Students can also choose from many payment plans.

Aside from federal and state student aid, students can also apply to the following programs:

  • California Dream Loan
  • Nursing Loan
  • TEACH Grants
  • LAEP Work Study

Reducing Your Risk for Student Loan Default

Effective financial planning and management habits are at the heart of on-time payment of your student loans! You should be proactive in taking out student loans regardless of your current financial status and projected post-graduation income, too.

Understand student loans.

Keep in mind that student loans must be paid in full, meaning the principal amounts plus interest and other charges, according to a specific amortization and schedule. While there are exceptions, such as student loan forgiveness and the student loan payment pause, these aspects are the norm.

Your first step then is to know what student loans are in general and your student loans in particular, specifically their interest rates, repayment plans, and grace period.

Create a sound budget.

Federal student loans have a six-month window from the time of graduation in which you can adopt a repayment plan; private loans may or may not have a grace period. Regardless of their sources, student loan payments must be included in your monthly budget. You should live within your means, adopt frugal habits, and take on side jobs, if necessary, to stay within your budget and make timely loan payments.

Set up automatic payments.

By setting up automatic payments, you can go about your day without worrying about default. You may also be able to get incentives like discounts with automatic payments. You can also explore alternative repayment plans, such as extended repayment or income-driven repayment, which will reduce your risk of default.

Stay informed.

The federal government implements student loan policies and, thus, has the authority to change them – be updated! You should also look into financial aid programs aimed at borrowers that offer temporary or permanent relief from student loan payments. These include forbearance, deferment and consolidation, and forgiveness.

Frequently Asked Questions

What’s the current default rate on college student loans?

The total default rate for all colleges and universities in the United States is 2.3%. Public colleges have a 2.3% rate, while private nonprofit colleges have the lowest at 1.7%, and private for-profit schools have the highest at 3.1%.

Why are college student loans in default?

  • Financial difficulties due to underemployment or unemployment
  • Unexpected expenses, including medical emergencies and family pressures
  • Unfavorable life circumstances, such as acute or chronic illness
  • Loan mismanagement
  • Lack of understanding of student loans
  • Living beyond your means

Which student loans typically have the lowest interest rate?

Federal student loans usually have the lowest interest rates as well as offering the most benefits and protection for borrowers. There’s also the fact that prospective borrowers don’t have to undergo credit checks and get the same interest rates.

Which state has the lowest student loan debt?

Wyoming has the lowest student loan balances at $1.7 billion. Alaska, North Dakota, Vermont and South Dakota round out the top five.

What’s the lowest college student loan payment?

Student loan payments fall between $200 and $299, on average.