New Reports from TICAS Show Higher Student Loan Default Rates
Updated on May 17, 2018
Two new student loan reports from The Institute for College Access & Success (TICAS)
TICAS.org | @TICAS_org highlight the continued and growing student loan default crisis. The reports indicate that students who attend for-profit colleges are much more likely to default on their student loans than those who attend public or not-for-profit colleges. In fact, for-profit college loans make up the majority of defaults.
Approximately 31% of colleges comprise over 73% of defaults based on the study’s sample size. One could hypothesize that these for-profit colleges are profiting off the US Department of Education by charging exorbitant fees knowing their graduates will default on their loans and not caring to run more efficiently. Student loan defaults occur at a rate of nearly 50% of for-profit colleges as compared to 10% of not-for-profit colleges. This may be attributed to the lower cost of not-for-profit and public colleges.
Who Is Most Affected?
The reports indicate several groups have a higher tendency to suffer a student loan default. These groups include:
- African-American students
- Pell Grant recipients
- First-generation students – are far more likely to end up in default than others
Even if people from these groups complete their programs, they are more likely to suffer a student loan default. Students who started at for-profit colleges are four times more likely to default than those who started at public colleges over the first 12 years of their student loan. Pell Grant recipients were more than five times as likely to suffer a student loan default as compared to students from higher income families. In fact, Pell grant recipients who started at for-profit colleges were more than twice as likely to default on their student loans.
Additional Information on Student Loan Default
An estimated seven million undergraduates are reliant upon federal student loans to attend college each year. While they are often a worthy investment in one’s future, the number of people suffering a student loan default continues to increase and for larger and larger amounts. In fact, the study found that after seven years, many loans have increased in the amount of debt because of deferments and forbearances which capitalize interest in the balance of the student loan.Tags: College, College loan, Federal student loan, For-profit college, Loan default, Not-for-profit college, Public college, Student Loan, Student loan default