Loan defaults for state’s community college students fall

Students registered for classes at Bunker Hill Community College in January 2014. Twelve percent of the school’s students defaulted on student loans in the most recent year of data, down from 14 percent one year prior. Suzanne Kreiter/Globe Staff/File

The percentage of Massachusetts community college students who are in default on their student loans has dropped significantly for the first time in three years, new federal data show.

Default rates have been high for students who graduated during and right after the Great Recession, but specialists say they believe the rate is dropping because the overall economy has improved and because colleges are doing more to educate students about the perils of debt.

The new data represent students who began repaying their loans in 2012 and defaulted in 2012, 2013, or 2014.

The two Massachusetts community colleges that saw the largest improvement were Greenfield Community College in Western Massachusetts, where the default rate declined from 22 percent to 15 percent, and Mount Wachusett Community College in Gardner, which saw its default rate drop from 18 percent to 11 percent, the second-lowest rate in the state behind Massachusetts Bay Community College in Wellesley.

In Boston, 12 percent of students at Bunker Hill Community College defaulted on their loans in the most recent year of data, down from 14 percent last year. Roxbury Community College does not issue loans.

Nationally, the default rate for community college students also dropped, from 21 percent to 19 percent. All of the 15 community colleges in this state now have rates below the national average.

Only two of the state’s two-year schools saw a rise in the number of their graduates who defaulted on their loans in the new federal data released last month: Cape Cod Community College, in West Barnstable, and North Shore Community College in Danvers.

Although students who attend all types of colleges borrow money, it is often more difficult for community college students to repay their loans because a greater percentage drop out, and those who graduate ofter work lower-paid jobs than peers who attended four-year schools.

In addition, many community college students, including many who are the first in their families to attend college, use loans to cover basic costs of living like food and rent to make up for hours they cut back at their jobs.

Kelly Morrissey, the financial aid director at Mount Wachusett Community College, attributed the significant drop to an increased number of financial literacy workshops as well as the school’s participation in a federal program that allows them to limit the number of unsubsidized loans students can borrow.

But counselors say borrowing is the only way for some students to pay for school, which costs about $5,500 a year at a community college.

Nationwide and in Massachusetts, community college students default more often than students at four-year schools, data show.

For example, the national percentage of students at private, four-year schools who default is 6 percent, whereas among community college students, it is 19 percent.

At the same time, a smaller portion of the student body at community colleges borrow, and the schools tend to have fewer students, so higher percentages don’t necessarily equal more students.

While the new data show that more students are able to repay their loans, the situation could be worse than numbers suggest. The government does not publish the number of students who are behind on payments, but not yet in default, which occurs after a year of missed payments.

“It’s a high default rate, and it says nothing about the delinquency rate,” said Paul Combe, president and chief executive of American Student Assistance, a Boston-based nonprofit that specializes in helping students with debt.