In a new Brookings Institute study entitled “The looming student loan default crisis is worse than we thought,” new data released by the U.S. Department of Education in October of last year was analyzed to determine new thoughts on the student loan default crisis.

According to the author of this study, Judith Scott-Clayton, data that was available previously was “limited to borrowers only, [followed] students for a relatively short period (3-5 years) after entering repayment, and had only information on student characteristics and experiences.” With this new data, it has allowed for a more thorough analysis of this looming crisis and sheds new light on what sort of solutions could perhaps turn the tide.

Top Findings in This Study and Conclusion

This new data provided detailed information on two cohorts, in 1995-1996 and 2003-2004, from the moment they first entered college to their repayment periods up to 20 years later. What this data reveals that previous data could not according to the study is “[provide] a broader perspective on student debt and default that considers all college entrants rather than just borrowers, provides substantially longer follow-up and enables a more detailed analysis of trends over time and heterogeneity across subgroups than previously possible.”

One of the key findings in the report is that default trends are highest amongst those who attended a for-profit college, with 52% defaulting in comparison to just 26% of public two-year borrowers after 12 years. Moreover, since for-profit students are more likely to borrow, the rate of default for this group is nearly four times more than the public-two-year group.

The data also revealed alarming trends along racial lines. According to the report, “debt and default among black college students [are] at crisis levels.” 21% of black BA graduates default in comparison to 4% white BA graduates—nearly five times more.

The report highlights the higher rates of default at for-profit colleges. Out of one hundred students who have ever attended a for-profit, 23 had defaulted on their loans within 12 years of starting college in the 1996 cohort in comparison to 43 in the 2004 cohort. This stands in contrast to the number who defaulted but never attended a for-profit college—8 and 11 in the respective cohorts detailed above.

What the report has concluded after analyzing these numbers that the data supports an increase in for-profit college regulation, improve the process in which one acquires a degree, apply greater promotion of income-contingent repayment options, and tackle the specific challenges that college students of color face.

To read the full Brookings Institute report, you can follow the link here.