Questions On The Default Of The Student Loan Scheme

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But the problems are, how to define default in the student-loan scheme, what is an acceptable rate of default as well as what factors contribute to the default? A qualitative data analysis software – NVivo 10 is used to organize, explore, and analyze my qualitative data relate to what matters in loan defaults. At a minimum, exploratory themes will include references about the student borrower’s ability to repay loans, their willingness to repay and institutional design of the repayment.
High default rates can be attributed to multiple factors. There is, however, a widespread view that student characteristics and background mostly account for this policy dilemma, including (a) the characteristics of students as they begin college (i.e.
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• Educational attainment, Institutional characteristics and Study field
Podgursky et al. (2002) found that high school rank, standardized test scores, and high school GPA, make loan defaults less likely. Woo (2002) suggested that students who attend proprietary vocational schools or community colleges have higher default rates than their peers at four-year universities or more selective institutions. Steiner et al. (2003) estimated that student borrowers who graduated had a 2 percent chance of defaulting while non-graduates had a 13.7 percent default rate. However, Lochner and MongeNaranjo (2004) found the effects of major choice on loan defaults disappeared after controlling for education debt and post-college earnings.
• Financial aids
A decrease in financial aids may result in an increase in the likelihood of default. And indeed, Greene (1989) found that grants and scholarships lowered the probability of loan defaults at the University of North Carolina at Greensboro. On the contrary, Meyer (1998) discovered that the probability of default increased to some extent for student borrowers who received more than $1,000 from non-loan financial aids.
• Debt burdens and personal income
Meyer (1998) found that the likelihood of loan default at
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