Implode-o-Meter News - New Data Gives Clearer Picture of Student Debt

The huge run-up in loans and the subsequent spike in defaults have not been driven by $100,000 debts incurred by students at expensive private colleges like N.Y.U.
They are driven by $8,000 loans at for-profit colleges and, to a lesser extent, community colleges. Borrowing for both of these has become far more common in recent years.Mr. Looney and Mr. Yannelis estimate that 75 percent of the increase in default between 2004 and 2011 can be explained by the surge in the number of borrowers at those institutions.
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Why did the face of borrowing change so rapidly in just a few years? During the recession, millions of students poured out of a weak labor market and into college to improve their skills. Historically, these students would have gone to community colleges. But with state tax revenues taking a nose-dive, community colleges were starved for funds and unable to expand capacity to absorb all of the new students. Students took their Pell Grants and loans to for-profit colleges. Enrollments at these schools spiked, and so did borrowing.

An important point. However, also note that defaults are up in all borrower categories (by type/selectivity of institution). Collectively, the defaults at 4-year collects are up from 27% in 2000 to 34% in 2010.

Relevant:

New Data Gives Clearer Picture of Student Debt