Characteristics of Student Loan Defaulters among Different Racial and Ethnic Groups. AIR 1995 Annual Forum Paper.

This study examined the characteristics of students who default on their student loans and compared default among Whites, Asians, African Americans, Hispanics, and Native Americans. Four logistic regression models were developed using information from the National Post-Secondary Student Aid Study which contains an array of pre-college, college, and post-college information about individual recipients of federal financial aid. Application of the models indicated that loan default is significantly explained by the personal characteristics of individual borrowers, and that differences among the different racial/ethnic groups are more a matter of degree than kind. Those borrowers in similar circumstances with respect to earned degrees, marital status, and dependent children exhibited similar levels of income and loan default, regardless of race or ethnic group. Findings suggest that campuses can best assist student borrowers by creating a climate that promotes good academic performance, encourages study in both pure and applied scientific disciplines, and ensures degree completion. The results also challenge current national policy which holds campuses accountable for the default behavior of former students, since default behavior can result from factors beyond campus control, like post-college marital status and family size. Appendices present the univariate statistics for the four models. (Contains 68 references.) (Author/SW)