Default Rate on Student Loans Drops Again, but Worsening Economy Could End Trend
September 20, 2001
The secretary of education, Roderick R. Paige, announced on
Wednesday that the rate at which borrowers default on student
loans has dropped for the ninth consecutive year, dipping
below 6 percent for the first time since the Education
Department started tracking the statistics. But department
officials warned that if economic conditions continue to
worsen, the rate in future years could creep up.
The proportion of borrowers who defaulted within 12 to 24
months of leaving college in 1999 fell to 5.6 percent,
compared with 6.9 percent for those who finished their
education in 1998. The 1999 rate represents a drop of 16.8
percentage points since 1990, when the default rate reached
its peak at 22.4 percent.
"This year's rate shows that accountability for results
works," Mr. Paige said. "The low national default rate
reflects a concerted effort by schools and colleges to
increase borrower awareness of their repayment obligations,
track borrower delinquencies, and counsel borrowers who get
behind in their payments."
Mr. Paige praised lenders and student-loan guarantee agencies
for providing debt-management, financial-counseling, and
flexible-repayment options to help "at-risk borrowers" from
defaulting on their loans. He also credited department
officials with effectively using the tools that Congress has
given them to minimize defaults and remove shoddy institutions
from the student-loan programs.
Since 1991, the Education Department has barred more than
1,100 educational institutions from the loan programs. Most of
those have been for-profit career schools.
This year, only seven institutions had 1999 default rates that
put them in danger of becoming or remaining barred from
participation in the federal student-aid programs.
Institutions with default rates of more than 40 percent in one
year or 25 percent or more for three consecutive years may be
dropped from one or more of the federal aid programs.
Education Department officials said Wednesday that only one
institution that could be categorized as a nonprofit college
-- South Piedmont Community College in North Carolina -- was
in jeopardy of being barred for the first time from the loan
programs, because 48 percent of borrowers there have defaulted
on their loans since leaving the institution in 1999.
Institutions have the right to appeal their default rates, and
typically do, arguing that the rates are inaccurate.
Mr. Paige was particularly pleased that for the first time, no
historically black college had a default rate high enough to
put it at risk of being penalized. Department officials and
guarantors have worked closely with some of those colleges to
help them develop and put in place effective plans for
reducing the number of students who default on their loans.
The default rate at for-profit institutions, which remains
higher than those for other sectors of higher education, fell
by the largest amount. As a group, they averaged 9.3 percent,
down from 11.4 percent in 1998.
Following are the average rates for other types of
institutions:
4.6 percent for public four-year colleges, down from 5.7
percent in 1998.
8.8 percent for public two-year colleges, down from 10.7
percent.
3.7 percent for private four-year colleges, down from 4.5
percent.
William D. Hansen, the Education Department's deputy
secretary, acknowledged during a news briefing that the
national default rate is likely to rise if the economy
continues its downturn. "Economic conditions do affect these
rates," he said. "It's a reality we do need to be aware of."
He said that borrowers who are struggling to pay off their
loans should take advantage of flexible-repayment options that
allow them to make smaller monthly loan payments.
Hogging bandwidth from the Chronicle of Higher Education.
September 28, 2001
Napster Was Nothing Compared With This Year's Bandwidth Problems
Andy Conklin, a would-be MP3 downloader, arrived at the
University of Delaware ready for action.Amid his clothes and
the trappings for his dorm room, he hauled in a brand new
computer -- a high-school-graduation gift from his parents.
And while a puny modem connection kept him from being much of
a Napster fiend at home, he saw great promise in the
university's fat Internet pipe.
"I thought I was going to have a really fast connection," Mr.
Conklin says, walking through campus one evening with Melissa
Pittman, a friend from his dormitory.
"Yeah," Ms. Pittman chimes in, "all the upperclassmen on our
floor said we were going to get spoiled."
Alas, too many freshmen must have heard older students singing
the network's praises. During the first couple of weeks of
class, the university's residential networks have been so
swamped with entertainment downloads -- not just music, but
also hefty video files -- that Mr. Conklin and Ms. Pittman
sometimes have had trouble opening a simple Web page.
The problem isn't unique to the University of Delaware.
Institutions as diverse as Salem State College, the Rochester
Institute of Technology, and the University of Denver had
tremendous surges in bandwidth use after students arrived --
loads far beyond what those institutions used last spring.
"A lot of it is attachments to e-mails that have gone up
logarithmically in size, where people are e-mailing music and
videos to each other," says Ken Stafford, the vice-chancellor
for technology at the University of Denver. Over the summer,
the university doubled its bandwidth capacity. "We'll probably
look at going up by another 50 percent or 100 percent by next
year," Mr. Stafford adds. The traffic went down recently when
the university staff installed a bandwidth shaper, which can
be programmed to limit entertainment downloads.
Getting Swamped
Justin D. Sipher, the director of computing and technology
services at the State University of New York at Potsdam, says
that his institution has also doubled its capacity since last
year and is already swamped by downloads. To respond to the
traffic, the university will double its bandwidth within a
month.
College administrators say this year's freshmen arrived
already knowing where to find various file-sharing
applications and how to use them. Officials at Delaware and
elsewhere say that it will take more than educational programs
and students' goodwill to solve the problem. Although Delaware
has in the past advocated an educational approach to bandwidth
management, university officials were forced to begin limiting
downloads earlier this month.
In this new round of bandwidth battles, Napster is a distant
memory. Network managers find the students flocking to a host
of copycat peer-to-peer file-sharing services, including
Audiogalaxy, BearShare, and Morpheus. The services, known by
the shorthand "P2P," let users download files directly from
other users' computers. The most popular new service might be
KaZaA, through which it's as easy to download a Stanley
Kubrick film as a Seinfeld episode, a Metallica song, an
image, or a document. Much of what KaZaA users make available
online is pornography.
The sizes of the files students want can vary. Images are
often quite small, usually anywhere from 50 to 200 kilobytes,
depending on the size and quality of the picture. Music files
are many times larger, about four megabytes each.
But video files and software can be far larger still. Versions
of Quake III, a popular video game, can run anywhere from 120
to 160 megabytes. A full-length movie with good resolution can
run from 350 to 800 megabytes. (Full-length films available
through file-sharing services are often split into more than
one part, so that users can watch them in segments.) As was
the case with Napster, in most instances these downloads of
images, videos, music, and software circumvent any copyright
restrictions.
A Rage for Video
Video seems to be a new rage among file-sharing students. "The
new systems are much better than Napster ever was -- you can
download not only video, but also software," says Matthew
Bailey, a senior analyst for Webnoize, a company that analyzes
and reports on the Internet entertainment industry.
Mr. Bailey says that his company tracks the average size of
files downloaded through "one of the leading P2P networks,"
and has found that the transfers are growing rapidly.
At the start of August, the average file size was 4.8
megabytes, not much bigger than an MP3 file. "That shows that
the majority of files being shared were music files," Mr.
Bailey says. But he adds, "The mix is definitely changing." By
the end of August, the average file size had increased to 5.2
megabytes. His guess is that more and more of the files
transferred contain video and software.
Mr. Bailey says that new compression technologies are always
improving, allowing users to make music files ever smaller
without significantly sacrificing sound quality. But video
files are more difficult to compress. "Video sizes won't get
smaller," he says. "If anything, they're going to get bigger."
More Trouble Ahead
And that spells trouble, as network managers at Delaware
realized earlier this month. Although university officials
don't examine the content of downloads, they are sure the
rising popularity of video is a factor.
"We have problems with certain students downloading 19
gigabytes of stuff," Susan J. Foster, the university's vice
president for information technologies, says with some
exasperation. "What is a student doing to download 19
gigabytes? What is that -- the entire Library of Congress? It
makes us think that it's video."
It's certainly no mystery to Mr. Conklin and Ms. Pittman, the
Delaware freshmen. One student on their floor regularly
downloads episodes of sci-fi cartoons. He recently used the
network to download a video game, says Ms. Pittman. "It took
all day to download -- it was a huge file."
While some universities imposed broad network limits during
the Napster craze last year, Delaware stuck to a simple policy
of educating students about good network citizenship. Under
the policy, students are required to pass a test with
questions about network ethics and copyright issues before
getting network access. The university dealt with egregious
bandwidth busters by shutting off their Internet access and
lecturing them about the rules of network use.
The educational programs will remain, Ms. Foster says, but the
university will add a downloading limit of one gigabyte per
student per day. But that's still plenty of data. Betsy
Mackenzie, director of the university's help center, says
students could still download hundreds of songs, thousands of
images, or a large video file without breaking the bank.
"We want to provide them the capability if their classes
require them to do that," Ms. Mackenzie says. "But we
certainly don't want them to download a movie."
"That's not what it's for," Ms. Foster adds.
When students go above the limit, their names will go on a
list, and university officials will talk to the students about
the one-gigabyte policy and explain that their Internet
service will be suspended if they don't curb their habits.
Already, Ms. Mackenzie says, about 100 students have showed up
on the list. Many of them don't realize they are helping to
clog the network, she says.
New Patterns
The University of Tennessee at Knoxville has seen tremendous
network-usage increases this year as well. Last spring, the
university installed a new Internet pipe just for the
dormitories; it ran at 85 percent of capacity until the end of
the school year. "They came back this year and pretty much
pegged it at 100 percent right off the bat," says Dewitt
Latimer, the director of information-technology infrastructure
for the university system. "As we delve down into it, we're
finding different kinds of patterns, different addresses that
they are going to. It's not the standard Napster and MP3
downloads anymore."
During the middle of the first week of September, Mr. Latimer
says, downloads by KaZaA users alone constituted more than 50
percent of the traffic on the residential networks; students
were using other peer-to-peer services as well, such as
Gnutella. And KaZaA users outside of the university were
gumming up traffic, too. About 75 percent of outgoing traffic
involved KaZaA users downloading material from students'
computers.
For the time being, Mr. Latimer says, the university is
considering educational programs and peer pressure as its
response. "We've talked with student leadership about posting
a top-50-users page, so they can police themselves. If someone
consistently turns up at the top, chances are he'll get some
evil stares from his fellow residents."
A Free Service
One reason bandwidth use is so hard to control is that, from
the campus user's perspective, it is just about free. At
Tennessee, unlimited Internet access in the dormitories is
paid for out of the general operating fund. Mr. Latimer says
he tried to persuade administrators to increase fees for those
who live in the dorms to cover the cost of the additional
bandwidth, but he was blocked by the campus-services office.
"The folks that head up local campus services are very strong
politically," Mr. Latimer says. "They view that as a fee
increase, which would cut down on their room-occupancy rates.
And they were able to prevent us from charging the residential
community."
If student demands continue to grow, Tennessee and other
universities will have to start including charges for
bandwidth in a separate technology fee, according to Mr.
Latimer.
But if the university starts leveling additional fees, the
two-thirds of the university's students who do not live in the
dorms might contact their student representatives and pressure
administrators to make residential students cover their own
bandwidth costs, he says. The off-campus students "have been
maintaining all along that the residential students should not
get free access, and they have been pushing through their own
student-governance process to have the residential dorms pay
for network access."
The university's long-range plan includes using a
bandwidth-management device, such as those manufactured by
Packeteer or Allot Communications, that can control the flow
and types of downloads going in and out of the university.
But there are institutions that plan to rely on their
students' sense of restraint. Goshen College, a small
institution in Indiana, has been hit by downloading fever,
just like larger universities. "We know it's movie downloads
using Morpheus and KaZaA," says Michael R. Sherer, the
college's director of information technology. "Students have
told us that movies are being downloaded, and they're in the
200- to 800-megabyte file-size range. That explains the
sustained peaking that a lot of people are seeing -- the pipe
is just filled up for hours at a time."
In Search of Files
However, much of that traffic was outbound -- users outside of
the university were swamping Goshen's network in search of
files on student computers. In the middle of the first week of
the month, Mr. Sherer sent out a message to all of the
students, showing them how to turn off the sharing option on
the KaZaA and Morpheus programs. He also asked them to
voluntarily curb their downloads. After the message went out,
the traffic cleared up.
"We will buy a Packeteer if necessary, but like the U. of
Delaware we would prefer education and cooperation," he says.
"We don't know much about scarcity in this culture, so this is
a teachable moment. In time, we'll know if the lesson stuck."
