3.9 million students dropped out with debt in the last two academic years

The conversation about student loan debt has been growing steadily louder over the past few years as average levels of debt at graduation rise.

However, the students who are most at risk are those who accumulate some debt, but then leave school before they graduate, Jill Barshay writes in the Hechinger Report.

Barshay used data from the Department of Education's College Scorecard to calculate the debt burdens of college students who do not graduate across different types of institutions. She found that a total of 3.9 million undergraduate students with federal student loan debt dropped out between mid-2014 and mid-2016.

Also see: How does a four year degree become a six-and-a-half year degree?

"It's a significant problem," says Sandy Baum, an expert on higher education finance at the Urban Institute and author of Student Debt: Rhetoric and Realities of Higher Education Financing.

"The federal government provides these loans, and the students interpret that as a stamp of approval. They assume that the federal government wouldn’t give them money to go to an institution that doesn’t graduate its students," Baum argues. In particular, students may assume the government is endorsing for-profit colleges, which have faced criticism over student debt levels, misleading advertising, and inflated job placement statistics. Roughly 900,000 students dropped out of a for-profit college with debt during the period Barshay examined.

Barshay acknowledges there are some limitations and additional context to the data. For example, she notes that the data does not track what the eventual outcomes were for the students in her analysis, such as how many of them ended up defaulting on their loans, returning to school at a later date, or transferring to other colleges. Some of the indebted students who dropped out may have even left to take jobs. 

According to research by the National Student Clearinghouse, cost is the primary reason students fail to graduate on time. Another of the biggest reasons students drop out is working while studying—which students typically do because they want to avoid student loan debt (Barshay, Hechinger Report, 11/6). 


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