The student loan borrower behind on repayments owes a whole lot less than you think.
There are too few tools to put them on strong financial footing from the moment they take out their first student loan.
Shur strives to deeply understand and continuously support the student borrower while in school and beyond.
Shur — in partnership with Equifax® and VantageScore™ — has been conducting comprehensive, national studies to gain a clear understanding of who the student loan borrower is, who is most likely to default, and why.
Read the insights and whitepaper here.
What We Know
Lower debt 2.2% of loans fell into default with an average defaulted loan of $6,913. A monthly payment of around $75. (2015-2019)
In 2020, Pew Charitable Trusts reported that many “off track” borrowers stumbled early in loan repayment. Most talked to their loan servicers only after they missed their first payment. Source
Less debt, higher default
The default rate for loans less than $2,000 was 182% higher than for loans exceeding $10,000. (2019)
In 2017, the Center for American Progress (CAP) pointed to media narratives portraying borrowers in default as borrowing more and retaining higher balances. Both CAP and the Brookings Institution (2018) reported that in reality defaults are highest among students who borrow relatively small amounts. Source Source
Completion matters Students who withdraw from school have a 338% higher default rate than those who graduate from four-year colleges. (2015-2019)
In 2015 and 2018, the Urban Institute pointed out that non-completers tend to make less money and can be demotivated to pay back the debt incurred while in school. Source
Credit gap Student loan borrowers with a credit score above 720 (Prime) have a default rate of .1%, with a median payment of $227. While borrowers with credit scores below 579 (Sub-Prime) have a 7.9% default rate with a median payment of $99. (2019)
In 2015, the Federal Reserve Board pointed to both degree non-completion and a borrower’s credit score prior to loan origination as highly predictive of later delinquency in repayment. More so than debt level. Source
Gender gap Where gender was reported, 58% of student loan borrowers captured in our study were women. Women in our sample defaulted at a higher rate than men: 2.4% vs. 2.1% (This is 14.3% higher). (2015-2019)
In 2017 and 2021, the American Association of University Women reported that women assume more student loan debt than men and pay more slowly over time. They cite a combination of less family support, the gender pay gap in and out of school, and — paradoxically — the fact that women are more likely to complete college than men. Source Source
Racial gap At 4.4%, Black student borrowers have the highest student loan default rate — 220% higher than average. Black borrowers accounted for 8.2% of those with available ethnicity data. (2015-2019)
In 2019, Brandeis University researchers found that after 20 years, Black student borrowers had paid only 6% of their loans while white borrowers had paid off 95% of their outstanding student debt. Source
A More Complete Picture: a decade of data and insights to understand student borrowers’ financial realities.
Methodology
Over the past year, Shur — with Equifax® and VantageScore™ — examined the financial dynamics of 896,157 anonymized student loan holders. This is from a 1% sample of the national population, from 2010 and 2015-2019. During these years, this sample of student borrowers had a combined 8,980,378 student loan records.
We sought to understand a variety of crucial factors: How much debt they held and what their payments were; where and for how long borrowers went to college and their graduation rates; the impact on a person’s VantageScore 4.0™ credit scores; data available on ethnicity, gender, household income, and geography.
Our findings cited above focus on borrowers who took loans to attend four-year, nonprofit, public and private institutions of higher education.
We chose 2010 and 2015-2019 for two reasons:
- We studied borrowers and loans from before the 2020 COVID-19 emergency relief for federal student loans — a suspension of payments and interest — implemented as part of the American Rescue Plan Act. This provides a more accurate representation of the actual student loan system.
- We studied borrowers and loans after the Financial Crisis of 2007-2008. Significant changes to the system were ushered in by the Health Care and Education Reconciliation Act of 2010, which ended the Guaranteed Student Loan Program.