Another Good Reason for No Student Loan Bailout

The typical defaulter is not a college grad at all, but rather someone who borrowed around $10K to attend a trade school of some kind.

"These data show that to the extent that there is a crisis, it is concentrated among borrowers who attended for-profit schools and, to a lesser extent, 2-year institutions and certain other nonselective institutions. We refer to these borrowers as"nontraditional" because, as students, they tend to be older, often enroll less than full time, and are living independently of their parents, and also because historically there were relatively few for-profit students and because 2-year students rarely borrowed.

"As a result, in 2000 these borrowers represented a small share of all federal student loan bor- rowers and an even smaller share of loan balances."

"Of all the students who left school, started to repay federal loans in 2011, and had fallen into default by 2013, about 70 percent were non- traditional borrowers."

"In contrast, the majority of undergraduate and graduate borrowers from 4-year public and private institutions, or"traditional borrowers," have experienced strong labor market outcomes and low rates of default, despite having the largest loan balances and facing the severe headwinds of the recent recession.

While the number of traditional borrow- ers also increased rapidly over time, recent borrowers' family backgrounds and labor market outcomes are not much different from their peers' in ear- lier years, especially for graduate students and undergraduates at relatively selective institutions.

"In fact, traditional borrowers earned more, on average, in 2013 than their peers had in 2002. recent borrowers in 2002.".

https://www.thestreet.com/mishtalk/economics/another-good-reason-for-no-student-loan-bailout