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The Characteristics Associated with Student - page 17 / 94





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VI. Financial Aid

“Financial Aid” variables measure the monetary resources available to students from their own income, from parent’s income and from student financial aid programs. While it is likely that high need/low-income borrowers will have higher probabilities of defaulting, there are other possibilities. The receipt of financial assistance might decrease the risk of default in groups that would otherwise be at high risk of default. It is also possible that high income, low need borrowers lack the commitment to their loan obligations that comes with having a high need for them, and so they default at rates comparable to other borrowers.

Adjusted Gross Income of Parents Adjusted Gross Income of Student Amount of Need Dependency Status Expected Family Contribution Total Family Contribution: The Expected Family Contribution (EFC) minus certain financial

aid amounts that cover the borrower’s EFC. Total Loan Aid Total Other Aid Total Work Study Aid

VII. Loan Briefing Variables

If debt counseling and exit counseling are operating effectively, they should lower the rate at which borrowers default.

Debt Counseling Exit Counseling (In-person)

VIII. Loan-related Variables

The “Loan-related Variables” originate from TG’s data bases. They represent basic measures and indicators of the borrower’s student loan experience that might have a relationship to default behavior. In theory, the “Number of Loans” and the “Total Loan Amount” could indicate the repayment burden that a borrower faces: the higher the burden, the greater the likelihood of default. Alternatively, those variables could simply be a proxy for how long the borrower went to school: generally speaking, the higher the loan amount, the more education the borrower received and, therefore, the less likely the borrower is to default. Participation in the consolidation loan program could signify that the borrower has a knowledge and experience of the tools that will help keep a person out of default.

Number of Lenders Number of Loans Consolidation Loan: whether or not the borrower has a consolidation loan Total TG Loan Amount


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