While looking at some schools on College Navigator (the feds’ website), I looked at the Cohort Default Rates for some colleges, a section that I rarely look at. Although there have been loan deferments and talk of loan forgiveness, there are still some noticeable differences amongst the default rates.
This made me wonder, would a school’s cohort default rate be an indication of the quality of the education provided to students? Presumably, if someone had a quality education, they would be able to get a job that would pay sufficiently well that they would not be defaulting on their loans. And though those who are taking out the loans are presumably amongst the more economically disadvantaged students, are the differences between colleges due to the students’ backgrounds or due to the education they receive?
So, I started gathering some data, which I would love the CC hive to provide feedback on. I pulled the cohort default rates for all public colleges in the states of Louisiana, Massachusetts, Missouri, New Mexico, North Carolina, and Washington that offered housing, a Bachelor’s, and that the state/university had chosen to describe as a 4-year school (noting this as two of the schools have Community College in their name). Each state has its own table sorted from lowest default rate to highest, using the cohort of 2017 as that probably had the least impact by Covid (of the 3 cohorts listed in College Navigator).
Especially for those of you with familiarity with some of these states (or for those of you familiar with the default rates in your own state’s colleges…feel free to look them up!), here are a couple of questions for you:
Do you see a relationship between the school’s default rate and the school’s reputation for quality in the state?
In your experiences of dealing with the alumni from the various universities, do you see a relationship between how well you thought of them (work/thought quality) as compared to the default rates?
Basically, do the default rates surprise you? Confirm what you’ve seen in real life? Or do you think the default rates have no correlation to the quality of education received?
If you were to use a default rate as a filter on schools, where would you draw the line when considering schools for anyone you’d give guidance to…5%? 10%? 15%? Doesn’t matter?
Without further ado, here are the charts, by state.
LOUISIANA
School
State
2019
2018
2017
LSU Health Sciences Center-New Orleans
LA
0.7%
1.5%
1.1%
LSU-Baton Rouge
LA
1.8%
4.0%
5.2%
LSU-Shreveport
LA
1.3%
5.5%
6.4%
Louisiana Tech
LA
1.8%
5.8%
6.5%
U. of Louisiana-Lafayette
LA
2.8%
6.0%
8.1%
U. of Louisiana-Monroe
LA
2.4%
5.4%
8.4%
Nicholls State
LA
2.4%
8.6%
10.8%
U. of New Orleans
LA
2.8%
6.6%
11.1%
Southeastern Louisiana
LA
3.1%
9.5%
11.9%
McNeese State
LA
3.3%
8.3%
12.4%
Northwestern State
LA
3.8%
9.4%
12.6%
Southern-New Orleans
LA
5.0%
12.3%
15.1%
LSU-Alexandria
LA
3.3%
11.9%
15.2%
Southern-Baton Rouge
LA
6.2%
13.6%
17.9%
Grambling State
LA
7.3%
18.6%
22.2%
MASSACHUSETTS
School
State
2019
2018
2017
Mass. Maritime
MA
1.0%
0.8%
2.7%
U. Mass-Amherst
MA
0.9%
1.9%
2.8%
Westfield State
MA
1.3%
3.8%
4.3%
U. Mass-Lowell
MA
0.8%
3.5%
4.4%
Bridgewater State
MA
1.7%
5.6%
5.5%
Mass. Coll. of Art & Design
MA
2.3%
2.8%
5.7%
Worcester State
MA
2.6%
4.4%
6.2%
U. Mass-Boston
MA
2.0%
5.5%
6.3%
Fitchburg State
MA
1.5%
4.8%
6.4%
Framingham State
MA
2.3%
3.8%
6.4%
Mass. Coll. Of Lib. Arts
MA
3.0%
3.4%
6.4%
Salem State
MA
1.4%
5.9%
7.6%
U. Mass-Dartmouth
MA
1.7%
5.8%
8.4%
MISSOURI
School
State
2019
2018
2017
Missouri Science & Tech
MO
0.8%
3.7%
3.1%
Truman State
MO
0.8%
2.6%
3.5%
U. of Missouri-Columbia
MO
0.7%
2.5%
3.6%
U. of Missouri-Kansas City
MO
0.9%
3.7%
6.4%
Missouri State-Springfield
MO
0.8%
3.9%
6.6%
U. of Missouri-St. Louis
MO
1.3%
4.6%
6.9%
U. of Central Missouri
MO
1.4%
6.1%
9.0%
Northwest Missouri
MO
1.6%
5.6%
9.2%
Southeast Missouri
MO
2.5%
8.6%
10.9%
Missouri Southern
MO
1.9%
7.6%
11.1%
Missouri Western
MO
0.7%
7.1%
11.1%
Harris-Stowe
MO
5.2%
18.1%
21.8%
Lincoln
MO
4.5%
16.5%
27.4%
NEW MEXICO
School
State
2019
2018
2017
New Mexico M&T
NM
1.7%
6.0%
7.3%
New Mexico Highlands
NM
3.5%
8.5%
9.0%
Eastern New Mexico
NM
3.0%
7.9%
11.5%
U. of New Mexico
NM
2.6%
8.8%
12.7%
Western New Mexico
NM
4.5%
10.3%
13.3%
New Mexico State
NM
3.9%
10.3%
13.5%
Inst. Of Amer. Indian and Alaska Native Culture and Arts Development
Schools with higher default rates tend to be those where I would guess lower income students are attending. So of the UMass schools, I would guess the richest kids go to Amherst, then Lowell, then Boston, then Dartmouth.
The predominant majors offered at each school seem somewhat correlated with default rates. Lowell has the tech/engineering majors. Maritime is somewhere between a military academy and a vocational school from what I understand. Many of those with higher defaults have a lots of very generic degrees (psychology, general business) or education degrees.
For tiers of “directional” state universities I can say I know a lot more people who attend or aspire to attend Westfield, Bridgewater, & Worcester State than Framingham, Salem, and Fitchburg. I also think the first set might be bigger schools with more majors than the second set. So I feel like there is some self section of student quality there. If your finances dictate you go in state and you need to live at home, a better student would usually choose Worcester over Framingham, for instance.
I have quite a bit of experience with cohort default rates. The rate is a measure of the share of a school’s federal student loan borrowers who default within a specified period of time after entering repayment. Schools with a lower acceptance rate will often have lower default rates, and schools that have a mission of access will often have a higher default rate. This is because when students leave school early in the program - as less academically prepared students may do - they are more likely to be unable to repay their loans. This is painting with broad strokes, though, and isn’t a method to choose (or not choose) a school.
I worked at a school with a highish default rate, and the academic side took it as a mandate to provide stronger academic support - while financial aid increased our financial literacy efforts. It was a Carnegie 1 research institution, and there were many borrowers who had no issues repaying their loans.
I also worked at a small school. My default rate was typically 0, but 1 student in default meant a sizeable default rate due to the small size.
Borrowers can default later, by the way, and that isn’t picked up in the default rate. I feel like it just doesn’t really paint a good picture.
NC here. I looked at admission rates, graduation rates, and employment rates in comparison to the default rates, and graduation rate was the thing that stuck out. The higher default rate schools also have a much lower graduation rate.
App State is not very selective, but still graduates a decent percentage of its students and is among the lowest for default. NC A&T is more selective than UNC Wilmington but only graduates half its students, and the default rate is near the highest vs. Wilmington near the lowest.
To answer your questions:
A very clear relationship because perceived quality and the default rate. Everyone knows Chapel Hill and NC State, most know App State, many know Wilmington, School of the Arts, ECU, UNC Charlotte (where is UNC Charlotte btw?) By the time I was to the bottom of the list there were some places I had never heard anyone mention in 20+ years living in NC)
The alumni I have met…no grand surprises.
Default rates do not surprise me, as I would expect that making ends meet with loan payments and no degree would be more difficult.
I wouldn’t use default rates as a filter, but at least in NC it seems to correspond very well with graduation rate, and I did use graduation rate as a filter (the higher the better, preferred over 70%, which might line up with <5% default). All the public schools from your other states that were ever considered for D24’s list also fall in the <5% category.
You’re right, @AustenNut, this is the kind of thing that interests me regardless of state.
I think it’s an interesting stat that doesn’t get enough attention, but there are issues. Others have mentioned some input confounds, plus the statistical fact that small schools have to be given large error bands (one college in my state graduates, on average, 17 students a year—the percentage difference between 1 student in default on the one hand and either 0 or 2 on the other won’t be indicative of really anything).
There’s one other, though, that jumps out at me: Colleges with different focuses are going to have different default rates because they have different missions. Colleges focused squarely on the health sciences or on engineering and technology are very likely to have lower default rates than colleges with a mission to produce PK–12 educators or criminologists and social workers. That isn’t a reflection of the colleges, it’s a reflection of the financial incentives society provides for going into certain fields.
That said, if you can apples-to-apples* it, comparing similarly situated colleges and running tests of significance and effect rather than just relying on percentages, yeah, I have to think about this a bit. I’m still skeptical of it by nature, but it’s an interesting idea.
*A strange idiom, BTW—apples are crispy and oranges are juicy. There, I just compared them, not a problem whatsoever.
Washington resident here. Most of the schools on the list are community colleges with a few 4 year degrees. And they have higher default rates, no surprise.
I was surprised Washington State was that much higher than Western Washington; I would have expected them to be about the same based on reputation.
I think of UW Bothell and Tacoma as more commuter schools and was a little surprised their default rates were so low. I would have expected them to be higher than Western Washington and Washington State. But maybe they get more out of state and international students.
Finally, I would have thought Central and Eastern would be reversed (or tied), but that’s kind of splitting hairs.
I think it is possible that the default rates for UW Bothell and UW Tacoma are merged somehow with UW Seattle, because the numbers for all three of them are identical for all years shown.
I was thinking the same thing about the merging of the UW data. Also, the bottom half of the list are former community colleges (Washington took out the “community” designation a few years ago and some now offer 4 year degrees). I don’t have further insight into these stats, although we know very few in-state kids (maybe only one) at any place other than UW Seattle, WWU and WSU. We live in a high SES area, most college bound students from our area who opt for in-state publics go to one of those three. There seems to be strong correlation between family income and default rate as speculated by others.
I am not surprised that the lowest cohort default rate schools in LA, MA, MO, NM are specialty schools focused on majors that are associated with strong job prospects (LSU Health Sciences Center, Massachusetts Maritime Academy, Missouri University of Science and Technology, New Mexico Institute of Mining and Technology).
Like other measures based on financial outcomes of graduates, the mix of majors at the school matters significantly, and the choice of major likely matters a lot in the context of an individual student.
UNCW does have students from richer families – only 22% Pell versus 58% Pell for NC A&T. Probably that has something to do with graduation and default rates.
Also, is K-12 education for college preparation racially equal within the same SES in NC? The two colleges do have different racial demographics as well.
I’m a MA resident and I think the list corresponds, roughly, with the level of selectivity of the schools. Mass Maritime is a special case as graduates go right into the Merchant Marine - it really has a singular focus. Grads are quite well paid which probably keeps the default rate down. Also, UMass Amherst probably attracts a somewhat wealthier student body as it isn’t commutable for most MA residents. UMass Boston, UMass Lowell, Salem State and Framingham State all have significant numbers of commuter students which might indicate that they are less wealthy (just a guess).
I’m going to throw this out there: There is absolutely no reason for students who leave school without a degree or students who are economically struggling to default on their loans. This is something I worked hard to convey to my borrowers who were behind on payments (I did extensive pre-default outreach). Yet I still had borrowers who ignored my advice and eventually defaulted. The income driven repayment plans are a godsend for these groups, and they can get a payment as low as 0.
So why do they default? One big reason in my experience was terrible customer service from the loan servicers. They would tell borrowers to request an economic hardship deferral when an income based repayment plan was a better option. They made it very difficult to sign up for income based plans … I sat in on conversations my borrowers had with servicers that confused even me, a financial aid professional. Another reason was related to mental health - the ostrich syndrome, in which overwhelmed borrowers stuck their heads in the sand. Or giving up when they encountered a system that was difficult to navigate. Yet another reason was not providing updated contact information to servicers and/or ignoring communications from them. And finally, just plain confusion.
I’d like to say that the new repayment plan will solve these issues; it doesn’t. However, some aspects will be helpful - particularly the automatic annual recertification for those who choose to allow the Department of Education to link to the IRS to obtain income data. Protecting more income in income based plans will be helpful, as well.
In North Carolina, five of the bottom six institutions are HBCUs (NCCU, NC A&T, FSU, ECSU, WSSU) and UNCP is an American Indian serving institution. Much research shows higher default rates at HBCUs, so this data seems to align with those findings. For example, according to a 2018 Brookings analysis, black students are five times more likely to default than white students.
It will be interesting to see how the NC Promise initiative impacts default rates for newer cohorts at three of these institutions: Fayetteville State, Elizabeth City State, and UNC Pembroke (Western Carolina is the fourth Promise institution, but has a lower default rate and fewer minority students). Promise students pay a greatly reduced rate of $500 per semester for full-time tuition, which could potentially reduce reliance on loans, especially for students who live close to these schools and can live at home rather than on campus.
I appreciate all the thoughtful responses so far. So many different things to think about!
I had never even thought that the cohort default rates would include students who hadn’t completed a degree, though it certainly makes sense that figure would align with schools that have higher percentages of Pell-recipients. Additionally, I am no stranger to the struggles (and failures) of our public educational system that will “graduate” students who have nowhere near the skills expected of a high school graduate. That these students would then struggle to succeed in college, and then drop out after receiving loans, is not surprising either.
Although there is a difference in pay amongst majors (education & social work vs. engineering and nursing, for instance), I do not think it should significantly affect default rates, particularly if they can be on an income-based plan (though as @kelsmom indicated, there can definitely be some obfuscation there by loan companies). Lower payments, longer time to pay off the loans, but not necessarily a default.
I do wish that there was a delineation in the cohort data between students who attended (who may have graduated or dropped out) vs. students who earned their degree. The former seems to shed more of a light on the preparation before attending college, but the latter might shed more light on the effectiveness of the college education.
Very good observations. One thing though is $1000 tuition if often offset by higher fees. So, while cheaper, these schools are still about $15-17K per year.
Although you may think that it should not significantly affect default rates, it is very likely that having lower income actually does significantly affect default rates. Lower income to the point of struggling to pay back the loans means that one has to be aware of income based repayment and how to apply for it, something that those with higher income are less likely to need to be concerned about. Even with income based repayment, someone with lower income may have little margin of safety against financial setbacks like medical bills that could push their personal financial situation into inability to pay everything.
In my area, everyone has a public school assigned by home address. There are also magnet schools (lottery based, usually some kind of special focus, within the school district) and charter schools (lottery based, free and not restricted by school district). Lower performing schools are given higher funding per student and have smaller class sizes. There are mechanisms by which students in certain categories of low performing schools have preference for admission to certain other schools in the district.
There is definitely an awareness that where you live affects your education, and every now and then there is a push to do things like bus kids in/out of good/bad schools, but really no one wants to be forced to be on a bus for 3 hours a day. As more schools are built, magnets built in (or moved to) lower SES areas tend to reserve a certain percentage of spots in the school for students within the immediate area.
D24 attends a cooperative innovative grade 11-13 high school (lottery based with minimum GPA) which is more diverse than her home school because it pulls from anywhere in the school district.
In our school district (large urban/suburban), anyone who graduates with high school required classes should be prepared for some level of public college in NC at the very least.
Not to mention that those with lower incomes are more likely to have been pulled into predatory or at least near-predatory private loans, which often don’t have the same repayment options available.