UMCP Student Loan Default Study & Financial Literacy Initiatives
Student loan default by state
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Dane Mastrangelo
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A look at the correlation between student loan defaults, Poverty rates, and population size of the top 10 states listed by student loan default rates.
Transcript of Student loan default by state
Dane Mastrangelo
FY 2011 2-Year Draft Cohort Default Rates by State/Territory
Calculated July 27, 2013
State
Number of Schools
Number of Borrowers in Default
Number of Borrowers in Repayment
Student Loan Default Rate Adult Population
New Mexico 30 3,201 20,767 15.4% 1,571,096
Arizona 95 51,329 375,852 13.6% 4,932,361
West Virginia 58 5,000 36,694 13.6% 1,471,372
Kentucky 87 8,618 66,569 12.9% 3,362,177
Iowa 88 18,680 150,776 12.3% 2,351,233
Oklahoma 87 6,304 51,701 12.1% 2,877,457
Arkansas 65 4,498 37,310 12.0% 2,238,250
Texas 302 32,306 273,239 11.8% 19,073,564
Ohio 255 24,954 214,200 11.6% 8,880,551
Mississippi 43 4,560 39,336 11.5% 2,239,593
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Student Loan Default Rate
Student Loan Default Rate
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Scatter Plot shows no correlation.
It appears as though there is very little if any correlation between the size of the population of these states and the rate of percentage of student loan defaults in these states.
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Student Loan Default Rate
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6 of the 10 states with the highest poverty rate were also were in the top 10 states with the highest loan default rates.
This shows a pretty significant relationship between poverty and loan defaults.
My recommendation as to how to lower the default rates of the Top 10 States would be to implement programs to lessen the amount of poverty in those states.
It appears that the underlying issue is the poor economies of these states, which translates into higher default rates.
By adding jobs and resources into these economies, it would be likely to trigger a chain reaction of lower default rates, lower poverty, and lower unemployment rates which would most likely lead to lower theft and other crime rates.
By lessening a major problem like poverty, you can also lessen many other problems like high rates of student loan defaults.
