About 40% of students who attended college in 2004 will eventually default on their student loans by 2023, according to an analysis conducted by Judith Scott-Clayton, an associate professor of economics and education at Teachers College, Columbia University. That figure is about double the default rate among students who attended college in 1996. By analyzing a 20-year trend for 1996 graduates, Scott-Clayton can extrapolate how the 2004 graduating class will perform during the next six-to-seven years.
Among the findings from Scott-Clayton’s study are:
- While the average debt per student continues to rise, defaults are highest among students who borrow lesser amounts than those who borrow more money.
- Default rates among African-American students is at “crisis” levels. African-American students who graduate college with a Bachelor’s degree default on their student loans at a rate that is five times higher than the default rate on student loans taken out by white individuals who drop out of college.
- Nearly twice as many students who attended for-profit colleges in 2004 default on their student loans, when compared with those who attended for-profit colleges in 1996.
Among the conclusions reached by the analysis, Scott-Clayton suggests further regulation of the for-profit college industry, to promote loan repayment options that are based in income and ability of individuals to repay the loans, and to “more fully address the particular challenges faced by college students of color.”
