Utah students are doing such a good job paying back their loans that the state has been able to slash its default rate in half since 2005, according to a recent federal report.

In fact, Utah's default rate is the lowest in the country.

The average Utah borrower owes $13,000 in student loans, but due to a new program that lets them pay loans back in smaller payments or defer paying at all until a more reasonable time, many are chipping away at their debt, resulting in a 2.1 percent default rate for the state.

"No one likes to incur debt, but the fact that Utahns have the lowest student-loan default rate in the country tells us their loans were a worthwhile investment of time and money," Gov. Gary Herbert said. "Student-loan debt, like mortgage debt, can be an investment in a brighter future."

The most recent numbers come from the U.S. Department of Education report on default rates, released in September. Of the Utah Higher Education Assistance Authority's 170,000 borrowers, 24,118 began repayment in 2006, and of those, only 507 defaulted. Nationally, an average of 6.7 percent of student-loan borrowers have defaulted, resulting in loss of federal assistance eligibility or sanctions for the schools with the highest default rates.

BYU, which consistently has low default rates among student borrowers, boasts the state's highest rate of students actively repaying loans. Of 3,500 borrowers, only 0.4 percent default. On the other hand, more than 17 percent of the 1,047 borrowers attending Everest College, a private, for-profit institution, have defaulted, according to the report. However, Everest has a smaller number of borrowers, which affects the results.

The state's success, in a time when layoffs, budget cuts, downsizing and hiring freezes are prevalent, comes as a likely result of the Ray of Hope program, which began earlier this year to help students develop an alternative way to pay back a loan that has become obtrusive. But it is also due to Utah's relatively strong job market and a lower number of students who need to borrow money.

"The economic downturn likely had a significant impact on the borrowers captured in these rates," U.S. Secretary of Education Arne Duncan said in a statement. "The department is reaching out to make sure current and prospective borrowers are aware of the many flexible repayment options designed to assist them with their financial obligations, such as the new Income-based Repayment Plan."

The Utah Higher Education Assistance Authority's six-member default-aversion team has been locating borrowers however it can, via Facebook, MySpace, home and work addresses, e-mail and even at malls, to help them with the paperwork to get the process started.

The agency is servicing loans to 40 higher-education institutions statewide, including public and private colleges, as well as private for-profit and nonprofit institutions and trade schools. Of the borrowers enrolled or already graduated, 1,245 have defaulted on their loans.

"If someone defaults on their loan, no one succeeds," said the agency's executive director, David Feitz. "We get to borrowers and help them create a plan to repay their debt."

Utah's student-loan default rates increased to 4.3 percent in 2005, which prompted the creation of the program.

The department's report and news of Utah's low default rate come in the midst of a Washington, D.C., debate on nationalizing student loans. Sens. Orrin Hatch and Bob Bennett, both R-Utah, have advocated keeping student-loan administration local to perpetuate Utah's successful track record.

"Achieving the lowest default rate in the nation doesn't happen from Washington, D.C.," Hatch said. "It comes from experienced and knowledgeable local people taking the time to give personal attention."

Hatch said he believes Utah authority should maintain agreements with current borrowers and continue to manage repayments even if the distribution of student loans is nationalized.

e-mail: wleonard@desnews.com