The RNC wants to make student loans competitive again. They never were.
This allows for a broader perspective that considers all first-time college entrants rather than just borrowers, provides substantially longer follow-up than other data sources, and enables a more detailed analysis of trends over time and heterogeneity across subgroups. 6
The best prior estimates of overall default rates come from Looney and Yannelis (2015), who examine defaults up to five years after entering repayment, and Miller payday loan store Valley Stream NY (2017), who uses the new BPS-04 data to examine default rates within 12 years of college entry. These two sources provide similar estimates: about 28 to 29 percent of all borrowers ultimately default.
But even 12 years may not be long enough to get a complete picture of defaults. The new data also allow loan outcomes to be tracked for a full 20 years after initial college entry, though only for the 1996 entry cohort. Continue reading “How Debt and Default Evolve Over Time, By Entry Cohort”