Student loan defaults nix9/3/2023 To be sure, college tuition rose almost 360 percent between 19, and graduates of professional schools, which boast some of the highest tuition rates, tend to owe the most. This dispels the notion that the chief cause of student-debt default is rising tuition. Nontraditional students who had left school and started to repay loans in 2011 accounted for 70 percent of those who had fallen into default by 2013. In research with Brookings Institution’s Adam Looney, Yannelis finds that nontraditional student borrowers as a proportion of all US students grew to become almost half of all new borrowers by 2011. Rising tuition costs aren’t driving default rates Their higher fees saddle students with more debt than nonprofit colleges. The colleges therefore disproportionately enroll higher-risk borrowers. For-profit colleges aggressively market themselves to nontraditional students, he argues. Since for-profit schools offer fully online degree programs, and night and weekend classes, they are particularly appealing to nontraditional students, many of whom have families or work full-time jobs.Īnd for-profit colleges have played a significant role in driving the increase in student-loan debt in the US, suggests Chicago Booth’s Constantine Yannelis. They are more likely to be Hispanic or African American. They are disproportionately women and single parents. They tend to have lower family incomes than typical college students. Nontraditional students tend to be older than 25 and often they are the first in their families to attend college. This has particularly affected nontraditional students, according to research by Harvard’s David J. But rather than enjoying an income boost, many graduates of for-profit schools have found themselves struggling to pay back student loans, and defaulting on their debts. Workers in the United States have responded by seeking college courses to improve their skills, and many have been drawn to for-profit institutions, which offer two- or four-year degrees or professional certificates in fields such as health administration, culinary arts, and cosmetology. A central driver of growing income inequality in recent decades has been the earnings premium commanded by those with technical skills, and a widening gap between college graduates and those with a high-school diploma or less.
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