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Student loan default by state

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A look at the correlation between student loan defaults, Poverty rates, and population size of the top 10 states listed by student loan default rates.

A look at the correlation between student loan defaults, Poverty rates, and population size of the top 10 states listed by student loan default rates.

Published in Economy & Finance , Business
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  • 1. Dane Mastrangelo
  • 2. FY 2011 2-Year Draft Cohort Default Rates by State/Territory Calculated July 27, 2013 State Number of Schools Number of Number of Borrowers Borrowers in Default in Repayment Student Loan Default Rate Adult Population New Mexico 30 3,201 20,767 15.4% 1,571,096 Arizona 95 51,329 375,852 13.6% 4,932,361 West Virginia 58 5,000 36,694 13.6% 1,471,372 Kentucky 87 8,618 66,569 12.9% 3,362,177 Iowa 88 18,680 150,776 12.3% 2,351,233 Oklahoma 87 6,304 51,701 12.1% 2,877,457 Arkansas 65 4,498 37,310 12.0% 2,238,250 Texas 302 32,306 273,239 11.8% 19,073,564 Ohio 255 24,954 214,200 11.6% 8,880,551 43 4,560 39,336 11.5% 2,239,593 Mississippi
  • 3. Student Loan Default Rate 18.0% Adult Population 25,000,000 16.0% 20,000,000 14.0% 12.0% 15,000,000 10.0% 10,000,000 8.0% Student Loan Default Rate 6.0% 5,000,000 4.0% 2.0% 0.0% 0 Adult Population
  • 4. Adult Population 25,000,000 20,000,000 15,000,000 Adult Population 10,000,000 5,000,000 0 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% Scatter Plot shows no correlation.
  • 5.  It appears as though there is very little if any correlation between the size of the population of these states and the rate of percentage of student loan defaults in these states.
  • 6. 25.0 Student Loan Default Rate 18.0% 20.0 16.0% 14.0% 15.0 12.0% 10.0% 10.0 Series1 8.0% 6.0% 5.0 4.0% 0.0 2.0% 0.0% Student Loan Default Rate
  • 7.   6 of the 10 states with the highest poverty rate were also were in the top 10 states with the highest loan default rates. This shows a pretty significant relationship between poverty and loan defaults.
  • 8.   My recommendation as to how to lower the default rates of the Top 10 States would be to implement programs to lessen the amount of poverty in those states. It appears that the underlying issue is the poor economies of these states, which translates into higher default rates.
  • 9.   By adding jobs and resources into these economies, it would be likely to trigger a chain reaction of lower default rates, lower poverty, and lower unemployment rates which would most likely lead to lower theft and other crime rates. By lessening a major problem like poverty, you can also lessen many other problems like high rates of student loan defaults.