Community College Students Who Borrow The Least Are Most Likely To Default

Incoming freshmen and transfer students with at least two academic years remaining until graduation are automatically enrolled in the program at no additional cost. That group accounted for a little under a half of all borrowers.


Roughly 17 percent of students at public, two-year colleges take out loans, the report notes.

The report found that students who borrow the least amount of money, not the most, are more at risk of default.

“People are literally upside down on their student loans”, said Andrew Josuwelt, the 28-year-old founder and CEO of Student Loan Hero, a fintech advisory site for student loan borrowers as well as soon-to-be college students. “The typical community college student is not an 18-year-old university student able to attend class full time and persist largely unaffected by life’s challenges”.

Nearly 90% of those community college students who failed to make payments on their student loans left college with debt but no degree, according to the study co-authored by Nicholas Hillman, assistant professor of educational leadership and policy and an affiliate with the Wisconsin Center for the Advancement of Education at UW-Madison.

Students often underestimate how much they owe, which the study says could influence the large numbers who took no action on their debt.

The report includes several recommendations for colleges and federal policymakers.

Newberry College is the first higher education institution in South Carolina to offer this innovative type of loan repayment assistance.

The analysis also pointed to potential problems with student loan servicers, who the government relies on to communicate with borrowers, and collections agencies, which it charges with helping students who have gone into default.

Basic information about how to navigate the repayment system can be provided as early as orientation and routinely during walk-in loan counseling, the report recommends. But that could change: the Obama administration has recently made free community college a key part of its education agenda, proposing a national program and pushing states to adopt their own initiatives.

“We knew that when this data came out, there would be a lot of questions like, ‘Why haven’t you tended to that before?’ ” said Laurie Wolf, a report contributor and executive dean for student services at Des Moines Area Community College.


Community colleges, open-access institutions which typically accept all students, have traditionally had sky-high dropout rates, which the analysis indicated were likely tied to loan defaults.

Community colleges probe rising student loan default rates