Debt and Education

Earning a college degree can be a pathway to higher wages and better employment opportunities, but for those who fail to graduate, those prospects quickly fade. And at a time when a majority of students finance their education with loans, dropping out of school comes with greater risks.

Yet a series of studies by Third Way, a think tank, show that many colleges and universities are leaving students with no better than a 50/50 chance of graduating or finding work that pays more than what someone with a high-school diploma can expect to earn. The findings build on a body of research advocating for greater focus on college completion, rather than just access to and affordability of higher education.

Approximately 22 percent of students who take out loans at public colleges were unable to begin paying down their debt three years after leaving school. The same is true for 19 percent of students at private institutions. The people having the most difficult time repaying their loans are those who never earned a degree, which makes it difficult to find work that pays enough to cover the debt.
Student loan defaults are concentrated among people with less than $10,000 in debt, mainly because these borrowers are less likely to have completed their degrees. Small-dollar loans account for nearly two-thirds of all defaults, according to the White House.