On August 31st, Susan Dynarski illuminated findings regarding loan default among college students in The New York Times article, “Why Students with Smallest Debts have the Larger Problem.”
According to the latest U.S. Department of Education data, student borrowers owe more than $1 trillion, and seven million borrowers are in default.
“It’s natural for people listening to the politicians to connect the two facts with a casual arrow: More debt leads to more default,” says Dynarski. "But the reality is surprising: Borrowers who owe the most are least likely to default."
Dynarski explains that loans in default are concentrated among the millions of students who drop out of college without completing their degree, and come out with less debt as a result. Students with incomplete credentials struggle to find well-paying jobs, while students borrowing larger sums of money tend to become the highest earners upon reaching the work force.
In order to make debt more manageable for students, Dynarski suggests several proposed modifications to current loan policy, including linking payments directly to income as the universal default and extending the repayment period to 25 years.
Susan Dynarski is a professor of public policy at the Gerald R. Ford School of Public Policy, and a professor of education at the University of Michigan's School of Education. She is co-founder and co-director of the Ford School’s Education Policy Initiative, which engages in applied, policy-relevant research designed to improve educational achievement and outcomes.