College Dropouts Face Loan Hardships.

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Author: Brush, Silla

Students who take out loans for college and then drop out are more likely to default on their loans and face economic hardship than their counterparts who graduate with debt, according to a report released last week by the National Center for Public Policy and Higher Education.

The report, the first to look at college dropouts with outstanding loans, found that one-fifth of all student-loan borrowers never receive a degree. In 2001 there were about 350,000 former students who had entered college within the previous six years but who had not graduated and still had loans to repay.

The report also found that borrowers who dropped out of college were twice as likely to be unemployed as borrowers who graduated from college, and 10 times as likely to default on their loans.

Some students are caught in a "double bind," the report says. They face economic hardships if they drop out after borrowing money. But if they try to avoid borrowing money by taking time off to work before college, or by working part time or full time while in college, they are at greater risk of failing to complete a degree and facing those same economic problems.

The complete report, "Borrowers Who Drop Out: A Neglected Aspect of the College Student Loan Trend," is available on the center's Web site (http://www.highereducation.org).

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By Silla Brush