7.12.2017

From the Brookings Blog: The For-Profit Student Debt Dilemma

Title: From the Brookings Blog: The For-Profit Student Debt Dilemma
Author: Stephanie Riegg Cellini and Rajeev Darolia
Source: The Brookings Institution

A recent blog post from The Brookings Institution discusses findings from their report on trends in student borrowing across sectors. Overall, the authors found that patterns for borrowing in the for-profit sector are similar to the private nonprofit sector in that students enrolled in these institutions are much more likely to borrow, tend to borrow larger amounts, and supplement federal funding with money from non-federal sources. However, student demographics at for-profit institutions most closely mirror that of students at community colleges. According to the report, for-profit institutions have the highest proportion of female students and students of color, and their students are more likely to come from low-income backgrounds and be single parents.

What sets for-profits apart is that students enrolled in this sector have higher average levels of federal grants than other sectors and much lower levels of other grant aid—especially institutional grant aid—leaving a gap typically filled by student loans. The report also includes a breakout of the difference in borrowing rates between for-profit institutions and community colleges into “explained” and “unexplained” variations, such as observable demographics, student financial independence, and student financial literacy.

To read the full post, please see the Brookings Institution website.

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