TICAS Fact Sheets Highlight Student Loan Default Characteristics

By Allie Bidwell, NASFAA Senior Reporter

Students from some of the most vulnerable populations are more likely to default on their federal student loans 12 years after entering college, and are more likely to attend institutions where many students borrow and few successfully repay their loans, according to two new fact sheets released by The Institute for College Access and Success (TICAS).

The fact sheets draw on data released in October 2017 by the Department of Education (ED), which focused on undergraduate students who enrolled in college for the first time in 2003-04 and tracked them for 12 years. In its analysis of the data, TICAS found that overall, 17 percent of those students defaulted within 12 years, but certain populations of students — such as Pell Grant recipients, first-generation students, and African American students — were significantly more likely to default than others.

One fact sheet focusing on students who are at the greatest risk of defaulting on their loans found, for example, that students who attended for-profit colleges were most likely to default. Nearly 1 in 2 of those students (48 percent) defaulted within 12 years. By comparison, 14 percent of students who attended private nonprofit colleges, and 12 percent of those who attended public colleges defaulted on their loans in the same time.

Pell Grant recipients were also more than five times as likely to default than non-Pell Grant recipients, TICAS found. Twenty-eight percent of Pell Grant recipients defaulted within 12 years, while 5 percent of non-Pell Grant recipients defaulted in that time. First-generation students were also more likely to default than non-first-generation students (24 percent compared with 14 percent, respectively).

When looking at college completion, TICAS found students were less likely to default if they completed their programs than if they dropped out. Research has shown some of the students most likely to default are those who drop out of college, and often borrow relatively small amounts of money. Overall, 11 percent of students who completed their programs within six years defaulted within 12 years, compared with 23 percent of those who dropped out by 2009.

Still, even among those students who completed their programs, the same vulnerable populations were more likely to default. About 1 in 5 Pell Grant recipients who completed their programs (21 percent) still defaulted, for example.

A second fact sheet using College Scorecard data and focusing on colleges with high borrowing rates and low repayment rates found that at 1 in 5 colleges (21 percent, or 781 colleges) most students borrow, but few successfully make progress toward paying down their principal balance seven years into repayment.

Of those institutions, for-profit institutions made up 73 percent, private nonprofit institutions made up 14 percent, public four-year institutions made up 6 percent, and public two-year institutions made up 7 percent.

First-generation students, Pell Grant recipients, and African American students were more likely than their peers to enroll at these institutions, but the majority still attended institutions with better repayment outcomes.

In a blog post explaining the fact sheets, TICAS wrote that although they take different approaches, the fact sheets "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," TICAS wrote. "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."

 

Publication Date: 5/4/2018


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