[caption id=”attachment_147777″ align=”aligncenter” width=”1024″](Joe Kline/The Bulletin via AP)
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The popular image of an indebted student might be wrong after all.
High levels of debt has been driven, not by young students at four-year universities, but by older students enrolling at for-profit colleges and two-year community colleges, according to a Brookings Institution report.
Total student-loan debt has surpassed $1 trillion. Rather than a small group of students with large debt loads, the high figure comes from many students taking on small blocks of debt, usually below $20,000.
Loan defaults from students at for-profit and community colleges are high. Buzzfeed notes that more than 20 percent of those students have defaulted within two years since 2011, more than double the rate of students at four-year universities.
That hasn’t always been so.
“In 1999, 70 [percent] of new borrowers were students at nonprofit four-year schools. But between 2009 and 2011, students at for-profit schools and community colleges made up almost half of all borrowers, some 45 [percent],” Molly Hensley-Clancy wrote.
One factor driving that change has been a weak economy.
During economic recessions, more people enroll in higher education. The unemployment rate stays lower than otherwise, and students look to gain skills as they wait out the recession.
The shift in the sorts of students driving the overall debt burden has uncomfortable implications for higher-education policy.
If so many students default on loans, recent efforts to encourage more students to attend community colleges could exacerbate the problem. Community colleges have poor graduation rates compared with four-year colleges and universities; encouraging higher attendance could give the students more debt, but no degree to show for it.
Part of the low graduation rates come from students transferring to a four-year college or university, but the graduation rates reflect the older, poorer, and less-prepared student body at community colleges.
Experiments in Tennessee and Texas, while aiming to lower debt burdens and help young adults gain a better economic foundation, could backfire. When policymakers try something different, they need to be mindful of its results, not the intentions behind it.
“The borrowers at for-profit schools and community colleges are older, poorer, and more high-risk: more likely to drop out without finishing their degrees and poorly insulated from unemployment. They are the students who, the report found, are defaulting on their loans in increasing numbers,” Molly Hensley-Clancy wrote.
New programs to help those students, in other words, make some of them worse off.
It remains true that someone with a college degree has better prospects than someone without one, but assistance programs don’t always achieve their goals.
