Should community college be free?

A new analysis of student loan borrowers shows that, contrary to public perception, those who borrow the least are most likely to default on their loans.

But the national default rate for community college students three years after they enter repayment is 20.6%, compared to the overall average of 13.7%, the report said.

When we think about the type of person who is most likely to default on their student loan debt, the most likely suspects would be the ones who are more than $100,000 in debt. In the past few years, the school credits several different policies for an nearly 5 percent decrease in the number of students who are defaulting on their student loans. “With better outreach from institutions, simplified federal programs, and better loan servicing, default among community college students can be significantly reduced”.

Of the 27,675 Iowa community college students who began making payments 4 1/2 years ago, 7,680 – or 27.8 percent – defaulted on their federal loans by January 2015. The stereotype would be the law school graduate with no job prospects, or the student who majored in the arts at an expensive private four-year college. Still, that default status is something that can screw up a student’s credit for the rest of their life.

“The Loan Repayment Promise demonstrates our belief in the value of a Newberry College education and our commitment to helping students pursue the career or vocation of their dreams”, said Newberry College president Dr. Maurice Scherrens. By point of comparison, the cohort with the lowest default rate was the group that took out between in $15,000 and $19,999 in loans.

One in seven Americans with student loans says they’re delaying tying the knot because of the crushing burden of student debt, according to a recent survey conducted by Student Loan Hero and the research firm YouGov. That group accounted for a little under a half of all borrowers.

“When it comes to (limiting the amount being borrowed)”, Wolf said, “most students say, ‘This is an entitlement program and I want to borrow as much as I’m entitled to”.

College grads are not just putting off student loan repayments, they’re delaying large milestones such as marriage and buying a home.

“There’s something that’s not sticking with them about the borrowing process”, she said. Students also may not have understood the terms of their debt, or believed they did not have to repay their loans if they failed to graduate, the report said. The Education Department has previously found fault with collections for failing to accurately inform borrowers, especially about plans like income-based repayment; it fired five of them in February for providing “inaccurate information”.