More College Dropouts Fail to Repay their Student Loans – What are the Reasons?

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Research has found that the single best predictor of tors of whether or not students are able to repay their student loans is college completion. Although there are several factors that influence the education loan repayment rates, whether or not a student leaves with some sort of credential seems to be the strongest predictor of whether or not the student will repay the loan. After 5 years of the student loan payment cycle, it has been found that 70% of borrowers who graduated from college with a degree have made some kind of progress on their student loan debt. However, for the borrowers who did not complete college, the rate of repayment is 45%. There is an obvious link between the repayment of loans and college completion to be found, but you are probably wondering why that is. Read on to see a few explanations as to why college dropouts are less likely to repay their student loans.

#1: College Graduates Typically Earn more Money

The income made by a 4-year college graduate surpasses around 50% of people who have some college experience but who don’t hold a degree. People who earn more money are more likely to be capable of meeting their monetary obligations such as repaying their student loans. Although it is true that college graduates accumulate more debt than dropouts, they are also able to handle their payments in a better way.

#2: College Dropouts Usually have Less Urge to Pay off Their Loans

There’s no one who loves paying student loans, so it is understandable that is is even more difficult for those who may feel that they’ve not received any benefit from their education. Due to the fact that a dropout doesn’t really have any credentials which they can use for advancement in his career, the benefit that they got from their college education is likely minimal. Although several dropouts can afford such payments, who would want to pay for something they don’t feel was worth the cost? The immediate consequence of inability to pay student loans is not serious enough. Being delinquent on your rent payments will mean eviction but not being able to pay your student loan won’t repossess your college degree.

#3: Dropouts and Graduates Differ in Many Ways

The factors that cause the gap in repayment rate between dropouts and graduates actually begin the moment the students set their foot on campus. Researchers can usually account for the factors like financial resources, family background, and income post-college, as well as a few observable differences that always exist between all those who complete college and those who don’t.