Proposed causes of student loan default, according to a review of the literature, seem to fall into three general categories: (1) the defaulters’ inability to pay; (2) the imperfect knowledge, or negative attitudes, of some borrowers; and (3) the incentives for default created by the program rules. The evidence suggests that inability to pay is the most important cause of default. This conclusion is based primarily on a number of empirical studies that have demonstrated the strong relationship between unemployment and low earnings on the one hand, and student loan default on the other. I now briefly review the literature on each of the three categories.

Related Post:

Comments :

0 comments to “WHY DO STUDENTS DEFAULT?”