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The Characteristics Associated with Student - page 60 / 94

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Adjusted Gross Income (AGI) of Student

Only borrowers with very small and very large incomes have default rates that differ significantly from the average for Texas A&M. Borrowers with gross incomes of zero have a default rate of 8.1 percent and borrowers with AGIs that exceed $12,000 have a default rate of 2.8 percent. But the default rates for the other categories range only between 4.0 percent and 4.8 percent, with no statistically significant difference between them. Nevertheless, this variable intimates yet again that income is related to the probability of default, if only to a small degree.

23

85.2

4

14.8

27

1,827

91.9

161

8.1

1,988

1,662

95.2

84

4.8

1,746

2,444

95.8

106

4.2

2,550

1,708

95.7

76

4.3

1,784

2,103

96.0

87

4.0

2,190

1,752

97.2

50

2.8

1,802

657

95.4

32

4.6

689

12,176

95.3

600

4.7

12,776

Adjusted Gross Income - Student

Less than zero Zero 1-2,000 2001-4,000 4001-6,000 6,001-12,000 12,001 and higher Missing All Undergraduates

Total

% of

% of

row

N

row

N

No

Default

Yes

57

96.6

2

3.4

59

4,534

95.1

236

4.9

4,770

997

91.7

90

8.3

1,087

843

94.1

53

5.9

896

968

95.7

43

4.3

1,011

Adjusted Gross Income (AGI) of Parents

Excluding the “zero” and “less than zero” categories, the parent’s AGI has the relationship to default that one would expect. In general, default rates decrease as income increases. As the table shows, this relationship holds for reported income categories that are greater than zero. The real problem here is that most of the zero AGIs are probably missing or unreported AGIs. When the missing AGIs are excluded from the analysis, the strength of association between AGI and default is greatly enhanced. In fact, the AGI of the parents becomes the variable with the strongest relationship to default in the Financial Aid section.

Adjusted Gross Income - Parents

Less than zero Zero 1-20,000 20,001-30,000 30,001-40,000

Total

% of

% of

row

N

row

N

No

Default

Yes

57

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