1,565

96.4

58

3.6

1,623

842

95.7

38

4.3

880

437

95.2

22

4.8

459

207

93.2

15

6.8

222

221

96.5

8

3.5

229

53

88.3

7

11.7

60

12,176

95.3

600

4.7

12,776

#

of Semesters Enrolled Less Than

# Full-Time

3 4 5 6 7-9 10 or more All Undergraduates

# Preparedness

Total

% of

% of

row

N

row

N

No

# Default

# Yes

The high school courses that students take, their class rankings and the scores they receive on college entrance exams appear to be related to whether they default on student loans later. Of the 15 variables in this section, ten have a statistically significant relationship to default behavior. The significant variables are High School Class Rank, Number of Other Science Credits, Number of Foreign Language Credits, Number of Biology Credits, Number of Chemistry Credits, Number of Physics Credits, Number of Algebra II Credits, Number of Advanced Math Credits, Number of Geometry Credits and SAT Equivalency Score. With a few exceptions, which will be discussed below, the more credits taken in a subject area, the lower the default rate for a group of borrowers. Not surprisingly, borrowers with higher class ranks and higher SAT equivalency scores also have lower default rates. (This study will regard a high school credit as a year of coursework in a subject.) Five variables – English Credits, Algebra I Credits, Computer Science Credits, Advanced Placement Credits, and Recommended High School Curriculum -- did not have a significant relationship to default. While many of the variables in this section have significant relationships to default, the strengths of the relationships are weak.

Statistical Significance

Uncertainty Coefficient

Cramer s V

Gamma

Spearman Correlation

Significant

0.01

0.07

-0.22

-0.06

Significant Significant

0.01 0.01

0.07 0.06

-0.23 0.36

-0.06 0.06

In reviewing the tables, the reader will notice that the missing category for the variables describing the number of course credits in various subject areas always has the same number of borrowers and has a relatively high default rate of 7.0 percent. Analysis shows that these borrowers belong disproportionately to the earlier repayment cohorts (1997 & 1998 vs. 1999). Because the earlier cohorts had higher default rates, all other things being equal, we would expect the group of borrowers with missing values to tend to have higher default rates. Of course, there may be additional factors that cause the default rates of the missing categories to be higher than average.

Statistical Summary: Preparedness

Variable High School Class Rank Percentile

Number of High School Other Science Credits

Number of High School Physics

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