Delinquency: The Untold Story of Student Loan Borrowing
Author: Cunningham, Alisa F.
Date: 2011-03-00
Type: Reports - Evaluative
Subjects: Higher Education,Student Loan Programs,Debt (Financial),Student Financial Aid,Loan Default,Access to Education,College Graduates,Federal Programs,Loan Repayment,Student Characteristics,Interviews

Student financial aid--including grants and loans--plays a key role in supporting students' access to and success in college. Yet, despite periodic increases in grant funding, students and their families have increasingly relied on borrowing to cover more of the costs of higher education. As the number of student borrowers has increased and their cumulative indebtedness has grown, so too has concern about whether the resulting debt levels are manageable and about the long-term impact of student loan debt on other life choices and consumption patterns. Without more complete data, policymakers have often focused on default rates, which are an incomplete measure of the range of experiences of contemporary students, including those who may have difficulties repaying their student loans. Default rates do not include the many borrowers who become delinquent on their federal education loans, but manage to avoid default. These borrowers face some of the same consequences as borrowers who default, but until now, the size and significance of this group has not been recognized or been part of the policy discussion about default prevention and financial literacy in general. To better understand the impact of borrowing and student indebtedness, this report examines the repayment experiences of student loan borrowers using data provided by five of the largest student loan guaranty agencies. It examines more than 8.7 million borrowers with nearly 27.5 million loans who entered repayment between October 1, 2004 and September 30, 2009. The primary focus is on the nearly 1.8 million borrowers who entered repayment in 2005. This report is a snapshot of borrower experiences, but it can help inform policy discussions about student loan programs and the tools available to help borrowers avoid delinquency and default. Appendices include: (1) Categorization of 2005 Borrowers by Loan Status; (2) Percentage Distribution of 2005 Borrowers by Loan Type and Graduation Status; (3) Percentage Distribution of 2005 Borrowers by Loan Status and Last Institution Attended; (4) Percentage Distribution of 2005 Borrowers by Loan Status and Highest Grade Level Before Entering Repayment; (5) Percentage Distribution of 2005 Borrowers by Loan Status and Age at Start of Repayment; (6) Median Amounts of Loans for Borrowers Who Entered Repayment in 2005 by Repayment Status; (7) Average Number of Loans for Borrowers Who Entered Repayment in 2005 by Repayment Status; (8) Percentage of Borrowers Entering Repayment in 2005 by Last Institution Attended and Highest Grade Level Borrowed; and (9) Percentage of Borrowers Entering Repayment in 2005 Who Graduated by Last Institution Attended and Highest Grade Level Borrowed. (Contains 15 tables, 5 boxes and 26 footnotes.) [Additional support for this paper was provided by the American Student Assistance, Educational Credit Management Corporation, Great Lakes Higher Education Guaranty Corporation and USA Funds.]