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Education

Who is being hit hardest in student debt crisis? "Non-traditional borrowers."

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Brookings just released a new analysis that presents our most detailed information yet on the student loan crisis. 

Researchers were able to look at information in the National Student Loan Data System, compiling results from a sample of four million borrowers. 

We already know that student debt has exploded in recent years, and now totals more than $1 trillion nationwide. What the new analysis shows is who is behind that debt. And it turns out, the huge growth in student debt hasn't been driven by your average 18-year-old university student. It's been driven by what the report calls "non-traditional borrowers."

What exactly is a "non-traditional borrower"? The report defines them as anyone who borrows to attend a for-profit university or a two-year university. They are non-traditional because students at these types of schools used to borrow less than students at your average four-year institution. These new "non-traditional borrowers" also share some other traits, according to the report: 

They tend to be older when they first enroll, to be from lower-income families, and to live in poorer neighborhoods. They are more likely to be first-generation borrowers. They attend programs they are less likely to complete and, post enrollment, are more likely to live in or near poverty and to experience weak labor market outcomes, outcomes that worsened disproportionately during the recession. And their loan burdens, though smaller on average both in absolute terms and relative to their earnings, have tended to increase faster over time.

The report finds that one out of five of these borrowers went into default within two years of the start of their repayment plan. 

And the amount owed by these borrowers is staggering. As of 2011, people borrowing to attend for-profit or two-year schools represented half of all borrowers. By 2013, they represented 70% of all defaults. 

The paper also breaks down which schools have the students who owe the most. And there's been a huge change on that front:

In 2000, only one of the top 25 schools whose students owed the most federal debt was a for-profit institution, whereas in 2014, 13 were. Borrowers from those 13 schools owed about $109 billion—almost 10% of all federal student loans.

If there's any good news in this report, it's that enrollment in for-profit schools has declined compared to its peak during the recession. But, because of the long-term nature of student debt, it'll be a while before anyone can say the debt crisis has passed.