About seven million undergraduates each year rely on federal loans to enroll in and complete college. While many students find that student loans are an excellent investment in their future and are able to successfully repay their loans, others struggle to make payments, or make payments that do not keep up with accruing interest. The worst-off borrowers are those who don’t make payments for at least 270 days, end up in default, and are left with much more to repay, wrecked credit, and limited employment and educational opportunities.
Two new TICAS fact sheets released today use different datasets and measures to look at where student loan repayment challenges are particularly severe. One uses a nationally-representative longitudinal survey of students who began college in 2003-04 to find that 17 percent of students defaulted on their loans within 12 years, including nearly half of students who first enrolled in for-profit colleges. Like others who have dug into these data, such as the Department of Education, Ben Miller, and Judith Scott-Clayton, our analysis finds that certain groups of students – including African-American students, Pell Grant recipients, and first-generation students – are far more likely to end up in default than others, even if they completed their programs.
The second fact sheet uses College Scorecard data to explore the colleges where many borrowers are seeing their loan balances grow, rather than shrink, many years after leaving school. Specifically, we focus on the 781 colleges where most undergraduate students borrow federal loans, and where fewer than half of those borrowers were paying down their debt seven years into repayment. At half of all for-profit colleges, most students borrow and few repay. Additionally, African-American students, Pell Grant recipients, and first-generation students all disproportionately enroll at colleges where most students borrow and few repay.
While these fact sheets take different approaches to looking at student loan repayment struggles, they underscore similar trends. First, while student loans are an excellent investment for many students, we need to pay more attention to the students who struggle to repay their loans. Second, they show that enrolling in and borrowing for college pose particular risks for underrepresented students, groups which may need additional support before, during, and after college. Finally, there are wide variations in repayment outcomes at different colleges, and for-profit colleges are especially likely to have poor repayment outcomes – underscoring the need for stronger accountability and oversight by states and the federal government of colleges that leave students with debts they cannot afford.
Read our new fact sheets here: