It's bad enough for students to drop out of college and miss the undeniable advantages of a degree, but to leave with no diploma plus a burden of debt is a double whammy many find difficult to overcome.

"Even though taking out loans is still a sound investment for most students, policymakers and education leaders can hardly be satisfied when borrowers leave school with no degree, a debt to repay and a high risk of defaulting on their loan," says Patrick Callan, president of the National Center for Public Policy and Higher Education, which published the report. "In some cases, these students are worse off than before."  

The May 2005 study, written by Lawrence Gladieux, an independent policy consultant, and Laura Perna, assistant professor of higher education at the University of Maryland, shows that half of all entering freshmen borrow to finance postsecondary education, and 20 percent of those borrowers drop out. The dropout borrowers are 10 times more likely than degreed borrowers to default on their loans and twice as likely to be unemployed six years after they began as freshmen, according to statistics from students who enrolled in a four-year institution in 1995-96. Dropouts in debt find themselves in a double bind: on the one hand, borrowing costs money, and on the other, delaying education, enrolling part time or working full time while in college are risk factors for dropping out.

If the rate of borrowing is any gauge, students attending less-than-four-year, for-profit institutions face the biggest challenge. The highest percentage of borrowers is found here: 68 percent go into debt to finance their education within six years of enrolling in private for-profit, less-than-four-year institutions. By contrast, 33 percent of the freshmen at public two-year colleges borrow. At four-year institutions, 67 percent of freshmen who expect to attain at least a bachelor's degree borrow.

Debt for students pursuing a four-year degree averages $15,000 to $20,000 by graduation. For those in low-income and minority groups, the debt burdens are higher.

To see the report, go to www.highereducation.org. [Virginia Kelly]

June 29, 2005