New analysis: Student loan borrowers with no degree

College dropouts experience longer-lasting debt burdens and are four times more likely to default on their student loans.
By: | November 12, 2020
Getty Images, bearsky23Getty Images, bearsky23

It’s a popular club that often has a lifetime membership, but it’s one that no one wants to be a member of: the group of adults who have student loan debt but no diploma to show for it. According to a new analysis from OneClass—a provider of exam study guides, lecture notes and video tutorials created by top students—57% of students who take on debt for college don’t go on to graduate. The dropout rate for all students lands at 40%, meaning those who need loans drop out a lot more often than their non-borrowing peers.

The percentages of dropouts with student loan debt are close to the overall average for public colleges and universities/community colleges (56%) and for-profit colleges (59%). The percentage is a bit lower, 48%, for those who dropped out of private nonprofit colleges.

Considering all the data, a big continued to-do for colleges is this: Support student loan recipients in completing their studies.

Much research has pointed to the college degree significantly opening up individuals’ earning potential. So not surprisingly, it takes longer for borrowers who drop out to chip away at their debt. Department of Education data showed that 12 years after starting college, those who graduated had on average 58% of their loan balance yet. But those who never graduated had 84% of their loan balance left. The median amount that group still owed: $24,400 (compared to $11,700 for those how had obtained a bachelor’s degree or higher).

Not graduating also impacts student loan defaults. OneClass researchers found that college dropouts are four times as likely to default on their loans compared to their graduating counterparts. That finding is an increase from an earlier longitudinal study where default rates were three times higher for those who didn’t graduate.

Considering all the data, a big continued to-do for colleges is this: Support student loan recipients in completing their studies.

College leaders must also keep affordability in mind, especially as college cost issues have been “exacerbated by COVID,” says Richard DeCapua, vice president of academic integrity at OneClass. By revisiting the curriculum, colleges can “explore faster, cheaper paths for degree completion that are non-traditional and innovative,” he adds.

DeCapua believes higher ed needs to be rebranded for a post-COVID world. Leaders can “articulate how they have learned from the hard virtual lessons of 2020,” he says, and “how they have adapted their institution for 2021.”

Melissa Ezarik is senior managing editor of UB.