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the official rate for a couple of reasons. First, the 4.7 percent default rate excludes graduate and professional students, who tend to have very low default rates. In contrast, the official cohort default rate includes these students. Second, the 4.7 percent rate is an average of several years when Texas A&M’s cohort default rates were typically higher than the FY 2000 cohort rate.

College Success

No other group of variables in this study has as strong a relationship with default behavior as the variables that describe the success of borrowers in their college studies. As measured by the Uncertainty Coefficient, the College Success section contains the top four variables and seven out of the top eight variables with the strongest relationships to default. It is clear that the success of borrowers in college is related to their success in the repayment of student loans.

Several different measures of college success are related to whether or not borrowers default after leaving Texas A&M. Not only is completion of a program of study important to whether or not borrowers default, but the quality of their educational attainments along the way, as measured by grade point average (GPA) and number of hours passed and failed, is equally important. For example, borrowers with GPAs that exceed 3.0 hardly default at all, even if they did not graduate from college. Conversely, borrowers with low GPAs have high default rates, whether or not they graduate (and they seldom graduate). There also appears to be an interaction between completion and quality of attainment, with borrowers who graduate and who achieve high GPAs (3.0 and higher) having among the lowest default rates of any group in the study (at 0.55 percent).

There are at least a couple of ways to depict the relationship between college success and default behavior. First, it is possible that the hard work and responsibility that result in college success – as measured by degree attainment, graduation, GPA and other variables – is a life habit that carries over to responsibilities in other areas of the borrower’s life, such as in loan repayment. Second, if college credentials mean anything, borrowers who achieve success in college will garner better positions in the job market and will demand higher salaries on average compared to those who are less successful in college. The higher salaries of the successful college student will translate into a lower burden of student loan debt and, therefore, a greater likelihood of repayment. Most likely, though, both these factors, and possibly others, combine to determine how student success really influences loan repayment.

Undergraduate GPA

Significant

0.15

0.27

-0.70

-0.22

Highest Degree Attained

Significant

0.14

0.26

N/A

N/A

Number of Degrees

Significant

0.14

0.26

-0.80

-0.25

Graduation Indicator

Significant

0.13

0.24

0.79

0.24

Number of Hours Failed

Significant

0.11

0.23

0.64

0.21

Number of Hours Passed

Significant

0.08

0.20

-0.70

-0.20

Primary Major

Significant

0.08

0.20

N/A

N/A

Statistical

Uncertainty

Cramer s

Spearman

Significance

Coefficient

V

Gamma

Correlation

Recent Major

Significant

0.03

0.12

N/A

N/A

Number of Hours Q-dropped

Significant

0.02

0.10

0.25

0.08

Number of Changes in Major

Significant

0.01

0.07

-0.13

-0.04

College of the Student’s Most

Statistical Summary: College Success

Variable

16

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