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ND, SMC grads manage debt well

Eileen Duffy | Wednesday, February 14, 2007

As indebted college students and recent post-graduates nationwide struggle to fork over money for their credit card and student loan bills on time, Notre Dame and Saint Mary’s students are taking a different route and paying them back in a fashion that’s not only timely – it’s “amazing,” said an executive at Notre Dame Federal Credit Union (NDFCU).Of the 300 Notre Dame graduates who were paying back government-guaranteed student loans – according to the U.S. Department of Education’s 2004 statistics (the most recent available) – just one “defaulted,” or was late on his payments. Statistics from 2003 show that Saint Mary’s had a zero cohort default rate, meaning not one graduate paid her bill late.”All I can quote are numbers, but that’s exceptionally low,” said Rick Burden, senior vice president and chief lending officer at NDFCU – where two-thirds to three-fourths of incoming freshmen at Notre Dame, Saint Mary’s and Holy Cross set up accounts each year, according to Burden.”I guess the average person going to these schools is not … well, not your average person,” he said. “The self-discipline it takes to maintain academic standards is reflective of the individuals.”As the supervisor of Perkins loan collection from Notre Dame graduates, Barbara Wardlow agrees. While Notre Dame students’ loans usually total more than $20,000, and debt occasionally blindsides them upon graduation, “our students are very good about paying back their loans,” she said.Notre Dame’s one-in-300 rate in 2004 translates to a .3 cohort default rate, lower than peer institutions such as Duke (.4), Georgetown (.5), Boston College (.9) and Northwestern (.9).It’s their predecessors’ near-spotless loan payback record that makes the board of directors at NDFCU feel comfortable granting credit cards to Notre Dame, Saint Mary’s and Holy Cross students with no credit history. A student can receive up to a $1,000 credit card limit as a freshman or sophomore, $1,500 as a junior or senior and $2,000 as a graduate student.”It’s unusual and frankly, kind of scary, when you think about it. When I first got here [about 13 years ago], I thought the board of directors was nuts,” Burden said. “College students have no money, generally, so how are they going to pay these bills back?”But in general, our students with credit cards probably have a better pay record than our members.”While that record is partly due to local students’ self-discipline, Burden said, many students also send bills home to their parents – so they’re careful about their purchases. “The Linebacker probably isn’t going to show up on that bill,” he joked.Bad credit history occasionally occurs with incoming freshmen, though. Often they apply for credit cards they can’t pay for as seniors in high school, Burden said, or they join a health club and don’t pay the membership fees – prompting the club to notify the credit bureau.”It’s rare, but it does happen,” Burden said, adding quickly that NDFCU would deny such students. “That shows we’re not totally stupid.”Nor is the University, which recognizes the staggering debt many graduates will face come graduation day. So it works to make students aware of and prepared for the money they’ll owe after college.The Career Center hosts a three-part Senior Transitions Course, now in its second year, which gives seniors a glimpse into the real world. Topics covered include developing a career plan, networking with alumni, budgeting and investing.”If you graduate from Notre Dame and you owe $30,000, that’s going to be a concern for you,” said Father Joe Carey, a career advisor at the Center and an organizer for the course. “That’s going to impact where you live, how much you can pay for rent, how much you spend on food. These sorts of things are big questions.”The first leg of the series takes place tonight.The Financial Aid Office also warns seniors how much they will owe, how often, and in what size increments. They used to hold meetings, but now they forward this information online. Wardlow still encourages students to come in for an exit interview, where a financial aid representative can answer any questions a student might have.She also advises graduating seniors to keep in touch with their loan lenders, from notifying them of an address change to asking them for forbearance if they know the money won’t be available to pay back.”You should never ignore the billings and any correspondence you get from your lenders,” she said. “It’s very hard to clean up your credit once you get that black mark on it.”And while Burden’s job is to negotiate as many loans as he can, he admitted there are situations when credit isn’t the right choice.”People borrow so much money nowadays,” he said. “We shouldn’t be in a hurry to get young people into debt.”