Federal Student Loan Debt Burden of Noncompleters

A recent report from the National Center for Education Statistics (NCES) provides an analysis of the federal student loan burden of students who did not complete a postsecondary degree within 6 years of first enrolling (noncompleters). The report compares noncompleters’ cumulative debt (total amount of debt over six years) from federal Stafford and Perkins loans to the cumulative debt of students who did complete a postsecondary degree (completers) within 6 years of first enrolling. In general, noncompleters borrowed more money per credit than completers, were less likely to be employed than completers, and had higher federal student loan debt burden (calculated as the ratio of their cumulative federal student loan debt to their annual income).

Among the report’s findings:

• In 2009, about one third of college students had not completed a degree within 6 years of first enrolling.
• The percentage of noncompleters who had borrowed any amount of federal student loans over those 6 years ranged from 25% for students who first enrolled at a public two-year college  to 86% for students who first enrolled at a for profit college. The rate of borrowing for noncompleters was 54% at public 4-year institutions and 66% at private nonprofit 4-year institutions.
• The 2009 cumulative federal student loan debt was higher than in 2001 for students who started in for-profit institutions ($7500 vs. $5300).
  • In public 4-year institutions, cumulative federal student loan debt was $600 less in 2009 than in 2001 ($9900 vs. $9300), in private nonprofit institutions it was $500 less ($10,400 vs. $10,900), and in public 2-year institutions it was $1600 less ($5700 vs. $7300).
• The percentage of noncompleters who took out Stafford or Perkins loans when they started college was less than the percentage of completers in every sector except the private nonprofit sector.
  • 66% of noncompleters borrowed money to attend private nonprofit 4-year institutions (compared to 64% of completers).
  • 54% of noncompleters borrowed money to attend public 4-year institutions (compared to 58% of completers).
  • 25% of noncompleters borrowed money to attend public 2-year institutions (compared to 45% of completers).
  • 86% of noncompleters borrowed money to attend for-profit institutions (compared to 88% of completers).
• Noncompleters borrowed more money per credit than completers in all sectors.
  • Noncompleters borrowed $130 more per credit at for-profit institutions than completers.
  • Noncompleters borrowed $40 more per credit at public 4-year institutions.
  • Noncompleters borrowed $70 more per credit at private 4-year nonprofit institutions.
  • Noncompleters borrowed $10 more per credit at public 2-year institutions.
• In 2009, employment rates of noncompleters ranged from 67% at for-profit institutions (compared to 76% of completers) to 80% at public 4-year institutions (compared to 89% of completers).
• The median federal student-debt-to-annual income ratio was 35% in 2009, an increase for all sectors since 2001 (24%).
  • In the for-profit sector, the median debt burden doubled since 2001, rising from 20% to 43%.
  • In the private nonprofit 4-year sector, the median federal student-debt-to-annual income ratio rose from 35% to 51% between 2001 and 2009.
  • At public 4-year institutions,. the median federal student-debt-to-annual income ratio rose from 26% to 34% between 2001 and 2009.
  • At public 2-year institutions the median federal student-debt-to-annual income ratio did not increase significantly, rising from 22% to 26% between 2001 and 2009.
• Among noncompleters who started in for-profit institutions, nearly one third (31%) had federal loan debt equal to or exceeding 100 percent of their annual income compared to 21% for 4-year private nonprofits, 13% for public 4-year institutions, and 7% at public 2-year institutions.