Looking at Student Loan Defaults through a Larger Window

Brown, Meta; Haughwout, Andrew F.; Lee, Donghoon; Scally, Joelle; Van der Klaauw, Wilbert

Discussion Paper

Looking at Student Loan Defaults through a Larger Window

Abstract: Most of our previous discussion about high levels of student loan delinquency and default has used static measures of payment status. But it is also instructive to consider the experience of borrowers over the lifetime of their student loans rather than at a point in time. In this second post in our three-part series on student loans, we use the Consumer Credit Panel (CCP), which is itself based on Equifax credit data, to create cohort default rates (CDRs) that are analogous to those produced by the Department of Education but go beyond their three-year window. We find that default rates continue to grow after three years and that performance by cohort worsened in the years leading up to the Great Recession.

Keywords: cohort default rate; student loans; delinquency; defaults;

JEL Classification: D1;