Student Loan Default: Do Characteristics of Four-Year Institutions Contribute to the Puzzle?

Abstract

College student debt and loan default are growing concerns in the United States. For each U.S. institution, the federal government is now reporting a cohort default rate, which is the percent of students who defaulted on their loan, averaged over a three-year period. Previous studies have amply shown that student characteristics are strongly associated with educational debt and one’s ability to repay student loans; however, few studies have deeply examined the rela- tionship between institutional characteristics and student loan default. This study examined characteristics of 1,399 four-year not- for-profit U.S. institutions and found significant differences in the 2010 federal student loan default rate by some important institu- tional variables, including admissions yield, geographic region, percent of minority students, institution control (private versus public), endowment, and expenditures for student services. Findings related to institutional characteristics can illuminate our understand- ing of the student loan default puzzle, and have implications for student success, academic policy, and resource allocation decisions.