Pew survey shows the incidence of default over a span of 20 years by borrowers’ personal, financial, and academic characteristics
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Projects: Student Loans
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Who Experiences Default?
Related Experts
Ama Takyi-Laryea Senior Manager
Student Loan Initiative
Phillip Oliff Senior Officer
Student Loan Initiative
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Pew’s findings also build on previously known characteristics that experience disparate repayment outcomes, such as a borrower’s race, age, and gender.
Black and Hispanic borrowers might be more vulnerable to default because of systemic factors like housing and labor market discrimination against them.2
Similarly, persistent gender wage gaps may contribute to higher default rates among female borrowers.3 Borrowers aged 45-59 were more likely to have their loans in default. This could reflect challenges faced by adult students who juggle multiple responsibilities, including child and elder care, employment, and education.
Limited Financial Resources Linked to Likelihood of Default
Borrowers with zero or negative net worth are over twice as likely to experience default compared with borrowers with a higher asset-to-debt ratio. Families with fewer assets and more debt may be less able to withstand financial shocks, which could cause them to struggle with repayment. Those experiencing unemployment or who were working part time were twice as likely to have their student loans in default than those who worked full time.
Financial Volatility Also Increases Likelihood of Default
Volatile household income and employment gaps are major disruptors that could lead to loan default. Borrowers who reported that their household incomes varied “quite a bit” from month-to-month experienced default more often (67%) than those whose incomes stayed “roughly the same” across several months (32%), and those who had employment gaps of four months or longer in a typical year before the pandemic experienced increased likelihood of default by twofold.
Data Visualization
Projects: Student Loans
Experts: Ama Takyi-Laryea & Phillip Oliff
Places: United States
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