Not surprisingly, borrowers with high earnings after they leave school are less likely to default than those with low earnings. This fact underlines the risk students assume in taking out large loans and then entering low-paying careers.
But, in predicting default, this income variable was only half as strong as the variables for unemployment or dropping out (Woo 2002).
Earning above $25,000 is associated with lower default rates and earning under $10,000 is associated with higher default rates (Volkwein et al. 1998).
Flint found that lower disposable incomes and greater incongruence between undergraduate major and current employment are risk factors for default (Flint 1997).
In an earlier study, defaulters were surveyed about the importance of various factors (many of which were post-college factors) that may have led to their default, including unemployment, low income, the presence of other more important loans to repay, dissatisfaction with their educational program, and intervening personal problems. Some 69 percent of four-year school borrowers said they were working, but had insufficient funds (Dynarski 1994).
Having an adequate disposable income is a necessary, but not sufficient, condition for honoring the terms of a student loan. Low incomes increase default risk, but many of those having the apparent ability to repay nevertheless choose not to. In this study, 11.6 percent of borrowers who had disposable incomes greater than total amount borrowed ended up defaulting, whereas 83 percent of borrowers with disposable incomes less than total amount borrowed were in repayment (Flint 1997).

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