Higher Ed Data Central: Student Loan Default Rates as Consumer Information

Andrew Gillen:

Our new study, In Debt and In the Dark: It's Time for Better Information on Student Loan Defaults, made two main points. First, we should improve the way we use default rates to hold colleges accountable by comparing expected to actual default rates rather than having a single cutoff that applies to all colleges (See a short synopsis).

The second point was that default rates are a great source of information for prospective students. One of the ways we illustrated this was by finding (to our dismay) the many colleges where default rates were greater than the graduation rates. We warned that these colleges should set of a "red flag" in the minds of students who will need to borrow to attend these colleges. Caution is warranted, as graduation rates are only tracked for first-time, full-time students based on when they begin college whereas default rates are tracked for borrowers based on when they start repaying their loans (and they ignore students' Perkins and GradPLUS loans).

In the report, we looked at these red flag colleges from several angles in Table 1 on page 11 (e.g., the adjusted default rate takes into account the percent of students borrowing). Today, we introduce another angle: geography. The maps below show the locations of red flag colleges in four college towns - Boston, San Francisco, Houston, and Chicago.

Posted by Jim Zellmer at July 14, 2013 2:49 AM
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