Long Term Student Loan Default Rates

Schools are required to publish a Cohort Default Rate (CDR), a useful but limited statistic showing the default rate of student loan borrowers from that school. Why is it limited? Because data is limited to federal loan programs and to students within three years of graduation. That tends to omit two groups of students with a higher-than-average likelihood of defaulting: students who are in forbearance programs– not making any payments due to financial hardship– and private loan borrowers. Fortunately, TICAS provides a broader look at student debt.

The recently-released Student Debt and the Class of 2017 incorporates additional data on private loans and looks at longer-term results. According to the report, 65% of college seniors who graduated in 2017 had taken out student loans, with approximately 15% of the total loan balance being private loans. While the data show that this is partly due to affordability– after grants and scholarships, the average unmet need was $11,000, well below the federal direct loan limits– more than half of private borrowers had not taken out the maximum in federal loans before turning to private lenders.

Overall, the study found that student borrowing has leveled off, consistent with other such studies. TICAS attributes this to several factors: increases in grant aid, increases in state funding, and increases in parental borrowing.

On a long-term basis, that report and an earlier TICAS study of student loan defaults, Students at the Greatest Risk of Loan Default, show some differences when compared with published CDRs. The national CDR for 2014, the most recent year for which data is available, was 11.5%. However, TICAS found that after 12 years, the default rate went up by about 50% and some groups including Pell Grant recipients, for-profit college attendees, first-generation and African-American students had above-average default rates. There was some good news, though: bachelor’s degree recipients had a 5% default rate nationally.

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