University of Minnesota students default on their federal student loans less often than students at other higher education institutions in the state, according to a recent study.

Average three-year default rates on federal student loans taken out in Minnesota increased from 9 to 11 percent between 2009 and 2010. But for loans taken out by University students, that rate was only 3.8 percent, according to a report released Oct. 1 by the U.S. Department of Education.

The report looked at how many borrowers who were due to begin repaying federal student loans between Oct. 1, 2009, and Sept. 20, 2010, defaulted on them during that year or in the following two years.

Though the state’s default rate is higher than the University’s, Minnesota as a whole still had lower rates than the national average of 14.7 percent.

Private, nonprofit institutions had the state’s lowest default rates at 5 percent.

University students are less likely to default on their loans because many find work soon after graduation, said University Office of Student Finance Director Kris Wright.

“[I]t’s often easier for our students to find work than it may be for students who graduate from other institutions,” she said.

Students who attended two-year public institutions in Minnesota had the state’s highest default rates at 18 percent, according to the report.

Many two-year public institutions are located in areas hit particularly hard by the recession, making students’ loan default rates higher, said Tricia Grimes, Minnesota Office of Higher Education policy analyst.

“It tends to lead to the idea that students graduating from those schools were having a tough time finding jobs in the area,” she said.

Wright said students who earn associate degrees at two-year schools often land jobs that don’t pay as much, making them more susceptible to defaulting on their loans.

Though defaulting can have negative effects like added fees and a lower credit score, Grimes said, student loan defaults can be avoided in most cases.

“Even if they feel like they have no money with which to pay their loans, they should ask about alternative payment plans,” she said.

Grimes said there are options for students who don’t make enough money to pay their loans after college, including a federal payment plan that can reduce the amount owed based on income.Wright said to help keep its default rates low, the University offers loan counseling services to students preparing to leave the school.

“We really want to make students aware of their loan responsibilities as they start college and before they leave,” she said.

The Minnesota state Legislature’s investments in direct student aid combined with the University’s tuition freeze will help default rates stay low, said Sandy Connolly, Minnesota Office of Higher Education communications director.

Senior Jeff Bartow said one of the reasons he chose chemical engineering as a career path is that graduates with that degree typically make enough money to pay off student loans.

“I want to find a way to pay as much as I can as quick as I can to get it out of the way,” he said.

Until then, Bartow said, he plans to minimize his living expenses.

“It’s still something I worry about,” he said. “Being in debt comes with sacrifices.”

Elementary education freshman Isabel Bengtson said she worries about paying off her loans.

“I wonder if jobs will be available and if the money I earn will cover my student loans,” she said. “It scares me.”