Thursday, January 18, 2018

Student Loans: "Worse than We Thought"

"Worse than we thought" — those chilling words are in the title of a Brookings report on student loan debt and repayment. Analyzing data from the Department of Education's Beginning Postsecondary Student survey, a nationally representative longitudinal survey of first-time college students, Brookings' senior fellow Judith Scott-Clayton has produced "the most comprehensive assessment yet of student debt and default from the moment students first enter college to when they are repaying loans up to 20 years later." Her analysis of the 1996 and 2004 college-entry cohorts lays bare so much bad news...

  • For the 2004 cohort, "nearly 40 percent may default on their student loans by 2023."
  • Behind the sky-high level of default are for-profit schools. For the 2004 cohort, the 12-year default rate for students who ever attended a for-profit school was 43 percent. For those who never attended a for-profit, the default rate was 11 percent.
  • "Debt and default among black or African-American college students is at crisis levels." Among Blacks in the 2004 entry cohort who ever attended a for-profit school, the 12-year default rate was 58 percent. 

There's much more bad news in the 10-page report, which concludes: "The results provide support for robust efforts to regulate the for-profit sector, to improve degree attainment and promote income-contingent loan repayment options for all students, and to more fully address the particular challenges faced by college students of color."

Source: The Brookings Institution, The Looming Student Loan Default Crisis is Worse than We Thought

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