In the study of Texas A&M borrowers, student Grade Point Average (GPA) had the strongest association to default of any success variable. The default rate of borrowers with a GPA of 2.0 or less is nearly 18 percent, but for borrowers with a GPA of 2.5 or more the default rate is 2.0 or less, and for borrowers with a GPA above 3.0, default is less than 1 percent (Steiner and Teszler 2003).
Most defaults at Texas A&M occur among borrowers who are not academically successful. Borrowers who have less than a 2.5 GPA account for 82.5 percent of all defaults (Steiner and Teszler 2003).
As GPA rises, the probability of default falls. Woo found that a half grade increase in GPA (i.e. .53 on a 4.0 scale) reduced the chance of default by 14 percent (Woo 2002).
Flint’s study, which was national, found that among student academic characteristics, only GPA was related to repayment, such that higher GPAs are associated with avoidance of default (Flint 1997).
A study of borrowers at a two-year public institution also found that low GPA (less than 2.0) was associated with higher default rates (Christman 2000).
Further bolstering the strong relationship between GPA and default, Volkwein et al. found that having a GPA above 3.0 was associated with lower default rates (Volkwein et al. 1998).
Researchers speculate that GPA may serve as a proxy for ability and motivation, traits associated with success in later life as well as in college (Volkwein and Szelest 1995).
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