- Trends for the 1996 entry cohort show that cumulative default rates continue to rise between 12 and 20 years after initial entry. Applying these trends to the 2004 entry cohort suggests that nearly 40% may default on their student loans by 2023.
- The new data show the importance of examining outcomes for all entrants, not just borrowers, since borrowing rates differ substantially across groups and over time. For example, for-profit borrowers default at twice the rate of public two-year borrowers (52% versus 26% after 12 years), but because for-profit students are more likely to borrow, the rate of default among all for-profit entrants is nearly four times that of public two-year entrants (47% versus 13%).
- The new data underscore that default rates depend more on student and institutional factors than on average levels of debt. For example, only 4%of White graduates who never attended a for-profit defaulted within 12 years of entry, compared to 67% of Black dropouts who ever attended a for-profit. And while average debt per student has risen over time, defaults are highest among those who borrow relatively small amounts.
- Debt and default among Black college students are at crisis levels, and even a bachelor’s degree is no guarantee of security: Black bachelor’s degree graduates default at five times the rate of White bachelor’s degree graduates (21% versus 4%), and are more likely to default than White dropouts.
- Trends over time are most alarming among for-profit colleges; out of 100 students who ever attended a for-profit, 23 defaulted within 12 years of starting college in the 1996 cohort compared to 43 in the 2004 cohort (compared to an increase from just 8 to 11 students among entrants who never attended a for-profit).
