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Study: Student Loan Default Rates Highest Among Minorities

A new analysis of National Center for Education Statistics data shows high student loan default rates for Black and Hispanic students, students who leave college with a heavy debt burden and college graduates who take low-paying jobs.

The NCES data, which disaggregates default loans by student characteristics, paint a picture that’s much different than U.S. Department of Education statistics. The department recently announced that the percentage of students who failed to repay government student loans within the first two years of repayment was 4.5 percent. But NCES data, which is a 10-year follow up on the debt status of students who graduated in 1993, puts the overall default rate at 9.7 percent.

NCES also found that students with $15,000 in loans were nearly three times as likely to default on their loan than a student with $5,000 in loans. Graduates with the lowest salaries in the cohort were four times likely to default than those with the highest salaries.

An analysis of NCES data by Education Sector, an independent education policy think tank, found that Black graduates had an overall default rate that was more than five times that of White graduates and nine times that of Asians. Hispanic graduates’ overall default rate was more than twice that of Whites and four times that of Asians. The defaults could not be explained by high debt and low salaries as, compared to other groups, Hispanics paid back the lowest percent of monthly income on loans.

“This type of more detailed information about students who default on their loans is not evident if we only look at the overall default rate, such as that reported by the Department of Education,” reads the Education Sector analysis.

Defaults are more likely to occur well after the first two years. With each default, collections costs of up to 40 percent of the loan balance are added to the loan, making repayment even more daunting for the graduates.

–Diverse staff


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