Institutional Accountability: A Comparison of the Predictors of Student Loan Repayment and Default Rates

Robert Kelchen and Amy Y. Li

The ANNALS of the American Academy of Political and Social Science, 2017, vol. 671, issue 1, 202-223

Abstract: The federal government holds colleges accountable if too many of their students default on loan repayment, but the default measure traditionally used captures only a fraction of students who are struggling to repay their loans. The 2015 College Scorecard dataset introduced a new loan repayment metric, showing that the percentage of students who have not reduced the principal balance of their loans by at least $1 over a given period of time far outstrips the traditional loan default measure. Using a sample of 3,595 colleges, we test the extent to which student demographics, institutional characteristics, and state-level economic factors are associated with repayment rates and default rates. We also examine whether factors associated with loan repayment rates change between one and seven years after students begin repayment. We find that characteristics traditionally associated with economic disadvantage, including being a first-generation college student or a member of an underrepresented minority group, tend to be associated with lower loan repayment rates, as does attendance at for-profit colleges. These factors are just as or more strongly associated with longer-term repayment rates compared to shorter-term repayment rates.

Keywords: student loans; cohort default rates; loan repayment; accountability; institution-level; higher education (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:anname:v:671:y:2017:i:1:p:202-223

DOI: 10.1177/0002716217701681

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