Descriptive analysis suggests that students who attend less-than-two-year, proprietary, or community colleges have higher default rates than their peers at four-year or more selective institutions. . . . </p>
<p>Generally, the wealthier the institution attended and the greater the student’s access to social and economic capital the less likely the student is to default. . . .</p>
<p>In fact, race/ethnicity emerges as one of the strongest predictors of default. . . . </p>
<p>Nearly all studies that considered the age of the student—either while enrolled in school or at the start of the loan repayment period—concluded that as age increases so does the likelihood of loan default, even after controlling for other important factors such as income. . . . </p>
<p>Family structure affects in a number of ways the likelihood of defaulting on loans. First, the greater the number of dependents claimed by a student, the greater the likelihood of loan default. . . . Indeed, having dependent children was found in one study to have a greater effect on the likelihood of loan default than the type of institution attended, parent’s income, and even the student’s annual earnings. Being a single parent was also associated with a greater risk of loan default. Being separated, divorced, or widowed was found to increase the probability of defaulting by more than 7 percent. One final way family can affect loan default is by providing a safety net. Students who could count on support from their families, including parents, were less likely to default than those who had no family support. . . .</p>
<p>Not surprisingly—given the positive relationship between education and socioeconomic status—students whose parents had higher levels of formal education were less likely to default than first-generation college students. . . . </p>
<p>Students who attended two-year and proprietary institutions in 2003-2004 owed over $38,000 on average compared to $36,000 among those who attended private four-year schools. . . . .</p>
<p>Markers of students’ academic experiences in postsecondary education—credits attempted, credits completed, credit hours failed, grades, transfer patterns, enrollment patterns, and time to degree/certificate—emerge as the strongest predictors of loan default. Students who enroll continuously, enroll in more rather than fewer credit hours, complete their attempted courses (i.e., do not receive incompletes), and graduate within eight semesters are less prone to default on average. . . . </p>
<p>Attainment at both the secondary and tertiary levels of education is perhaps the strongest predictor of loan default. Students who dropped out of high school or earned a GED were more likely to default than students who had earned a regular diploma. The majority of the research we reviewed suggested that completing a postsecondary program is the strongest single predictor of not defaulting regardless of institution type. . . . </p>
<p>Given the relationship between degree completion and likelihood of default, it is not surprising that academic preparation—as measured by high school rank, high school GPA, and standardized test scores— is also strongly related to default. Generally, students who are better prepared academically according to these traditional measures are less likely to default on their loans. As high school rank, standardized test scores, and high school GPA increased in the studies we reviewed, the likelihood of default generally decreased. . . .</p>
<p>[E]vidence exists to suggest that postgraduation earnings related to field of study affect personal income and, therefore, one’s ability to repay loans. Lochner and Monge-Naranjo (2004) found the effects of major choice disappeared after controlling for total debt and postcollege earnings. . . . </p>
<p>[G]iven the positive relationship between debt burden and default, a decrease in grants and scholarships may promote an increase in likelihood of default. Indeed, Greene (1989) found that grants and scholarships reduced the probability of default, at least at one traditional fouryear institution. . . . </p>
<p>Absent greater federal emphasis on grants, it is hard to imagine a scenario in which access to postsecondary education via loans will not also result in higher default rates among some student populations than policy makers would like. One alternative is to stop admitting or providing loans to students who are at greater risk of defaulting. This, of course, would turn a blind eye to the tens of thousands of students who triumph over their circumstances, repay their loans, and go on to lead responsible, productive lives—and would undercut the very purposes of the student loan program.