Student Loans and Repayment Rates: The Role of For-profit Colleges |
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| Authors: | Clive R Belfield |
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| Institution: | 1. Queens College, City University of New York, Flushing, NY, 11367, USA
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| Abstract: | This paper examines the institutional determinants of federal loan status for a recent cohort of college students. We first set out how institutions influence loan accumulations and repayment rates, with particular focus on for-profit colleges. We then test a set of hypotheses about loan status and repayment using national data on loans, defaults, and repayments merged with college-level data. For all measures of loan status there are significant raw gaps between for-profit colleges and public and not-for-profit colleges. After controlling for student characteristics, measures of college quality, and college practices, large gaps in loan balance per student remain: students in for-profit colleges, especially the 2-year colleges, borrow approximately four times as much as they would have at a 2-year public college. For a student attending the ‘average’ college, their repayment rate is predicted to be 5 9] percentage points lower if that college is for-profit compared to public non-profit]. Repayment rates are also lower for colleges with higher proportions of minority students and with lower graduation rates; contrary to some claims, single-program institutions appear to have higher repayment rates. |
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