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small number of defaulters also suggests that student loan defaults are generally a much less important issue for graduate borrowers than for undergraduate borrowers.

Variables

The study examined the variables listed in the following subsections. The variables are grouped into seven categories: College Success, Attendance Pattern, Preparedness, Demographics, Financial Aid, Loan Briefing, and Loan-related. In a joint effort, representatives from Texas A&M and TG members defined these categories and selected variables that had potential value in illuminating the default behavior of Texas A&M borrowers. Some of the variables that were originally selected were not included in the study because of data problems or because they were not applicable to undergraduate borrowers. Other variables in the list were not selected by the study team but are derived from data in the original data base.

I. Default or Not

Whether or not borrowers default is the focus of this study. The study regards a borrower as being in default if the borrower defaulted within the fiscal year the borrower entered repayment or within the following fiscal year. The study will determine whether default rates vary between different groups of borrowers or for different characteristics of borrowers. The rest of the variables, as described below, will define the characteristics of borrowers whose default rates are to be compared. As an example, the study will check whether default rates change as SAT equivalency scores increase. If they do and statistical tests show that the relationship is significant, then the findings might provide a valuable insight or, at least, a confirmation of conventional wisdom.

II. College Success

The “College Success” variables measure the academic performance of borrowers at TAMU. Borrowers can differ in the quantity and market value of their educations and in whether they attain their degrees. Variables such as “Hours Passed” and “Number of Degrees” measure the quantity of education that borrowers experience. “College” and “Degree” might implicitly reflect the market value of the education students receive. In general, the authors expect that labor markets will place a higher value on greater quantities and certain programs of study and that they will prefer degree completers to non-completers. If so, borrowers who succeed in college should obtain higher-paying jobs with better careers tracks and they should, therefore, be better positioned to repay their student loans. Furthermore, the personal qualities, like persistence and discipline, that contribute to a borrower’s success in college might also make the borrower more likely to repay his or her loans.

College of the Student’s Most Recent Major Type of Degree Graduation Indicator Highest Degree Attained Highest Level Attained Indicator of Minor Indicator of Secondary Major

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