Student loan debtShutterstock
What makes New York City students most vulnerable to default on their college loans?
- Attending a for-profit college
- Being low income
- Being an older student
- Being a black resident
- Being a Latino resident
- Attending college part-time
- Being unable to complete college
- All of the above
If you answered “all of the above,” you nailed it.
According to a report released this November by the New York City Department of Consumer Affairs, all seven indicators predict which students are at the highest risk of student loan default.
The DCA predicted that “for-profit college attendance” would be an indicator for loan default due to for-profit schools’ “longstanding history of predatory practices, high tuition, low graduation rates, and the low amount of money spent on instruction.”
Sure enough, its research found that as the percentage of college students in a neighborhood that attend a for-profit school increased, so does the neighborhood’s rate of student loan borrowers with debt in collections.
“Significantly, older students, students from neighborhoods with low incomes, and black and Hispanic students attend for-profit schools at a higher rate” — all communities with higher rates of default, the DCA reported.
For-profit institutions are also under-serving students 24 and older, the DCA charged, based on the “dramatically lower graduation rates” for older students compared to their peers attending public colleges.
The Bronx especially hard hit
Student loan debt distress is particularly severe in the Bronx, according to the DCA report. The Bronx has the highest rate of New Yorker students unable to complete school (42 percent), compared to Staten Island at 31 percent.
Of students in The Bronx who began college in the 2010 school year, less than half of them had completed a degree in 2017. On top of that, The Bronx had the highest rate of New Yorkers with student loan debt in collections and the highest rate of students attending for-profit institutions.
Similar patterns were found in the Brooklyn neighborhoods of Bedford-Stuyvesant, Brownsville, Ocean Hill, East New York, and Starrett City, as well as the Manhattan neighborhoods of East Harlem and Central Harlem.
The report suggest the need to promote affordable options such as community colleges in The Bronx and other parts of New York City as an alternative to for-profit schools “to help the most at-risk students avoid student loan debt distress before they even enroll,” according to the DCA.
This report follows an earlier DCA investigation of student loans in New York City, which found that although New Yorkers tend to have slightly student loan delinquencies, some parts of the city suffered loan delinquencies at a significantly higher rate.
The data explains why some neighborhoods have higher rates of default than others, researchers say, and can help the city target services to where they’re most needed.
“Innovative solutions are needed to help these vulnerable groups – older students, students of color, and students from low-income backgrounds – complete their degrees in the shortest amount of time possible,” the DCA declared. “This will help to reduce debt accumulation and ensure these students receive a positive return on their investment in higher education.”
DCA Commissioner Lorelei Salas suggested that by providing new insight into what is contributing to student loan defaults in New York City, the report makes a case for action.
“We cannot sit by as our students continue to fall victim to the cycle of student loan debt plaguing our country,” Salas told reporters. “By understanding factors associated with student loan debt default, we can now look to develop innovative solutions to help those who are most vulnerable so we can ensure that New Yorkers do not continue to be entrapped by student loan debt.”