Grads With Lower Levels Of Debt Are More Likely To Default


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Robert Donachie Capitol Hill and Health Care Reporter

Roughly a third of students with $5,000 or less of federally backed student loans defaulted within three years of leaving college, according to a White House report.

While roughly 30 percent of students who had between $5,000 and $10,000 in loans defaulted, and around 18 percent of those with between $10,000 and $20,000 defaulted within three years of leaving school.

What’s also surprising is those with the highest levels of student debt defaulted at a much lower rate. Just 4 percent of students with over $40,000 in loans defaulted on their debt. (RELATED: Obama Admin Announces New Rules That Will Forgive Billions In Student Loans)

Students with under $10,000 in loans comprise roughly two-thirds of student loan defaults, reports the White House.

Those with lower levels of debt comprise a much greater portion of overall borrowers, and therefore default more frequently. Additionally, borrowers with high debt burdens often have graduate and advanced degrees, and thus have a greater likelihood of getting a job with a high salary.

The White House found those with relatively small amounts of student loans “are often an indication that a borrower didn’t complete their program.” With no degree and student debt, it is likely that they “may struggle to get a job that pays decently enough to repay their loans.”

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