Who is struggling the most with student loans?

Dear Commons Community,

This piece, “Who is struggling the most with student loans?”  from CBS Money Watch was passed onto me by a colleague, Frank McCluskey.  It references a report (Degreeless in Debt) from the Education Sector published earlier this year that documents several trends regarding student borrowing:

  • Student borrowing has increased to the point that a majority of freshmen at all institutions now borrow to pay for their education. Borrowing has grown the most at for-profit institutions. This is especially significant because for-profit institutions enroll just 9 percent of all college students.
  • While borrowing is on the rise, dropout rates are also increasing. For-profit, four-year institutions have the highest dropout rate. In 2009, 54 percent of students in these institutions dropped out, an increase of 20 percentage points from 2001, when the rate was 34 percent.
  • Borrowers who drop out face higher unemployment rates, lower median incomes, and higher loan default rates than those who graduated.

The conclusion of the article is:

“Ironically, the strategies that dropouts use to get a better handle on college costs are actually increasing their chances of leaving school and ultimately defaulting on their debt. According to the study, here are the risk factors:

  • Delaying college after graduating from high school
  • Enrolling part-time during the first year of college
  • Working full-time (at least 35 hours a week) during the first year of college

If college prices continue to rise (pretty much a sure thing) and family income remains stagnant, there is little doubt that the dropout problem will grow, along with untenable default levels.”

The above is also being exacerbated by the decrease in funding in public higher education that is forcing many state colleges to be more selective in their admissions thereby directing many students who would be considered at risk (part-time, need remediation, etc.) into the private, for-profit sector.




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