Student Loan Default Rates Drop Nationally but Not in Kentucky

As described in a WFPL article published today, Kentucky’s federal student loan default rate is now the 4th- highest among the states. Also, while new data shows some improvement in the national student loan default rate, Kentucky’s rate did not improve.

According to the new federal Department of Education data, the national three-year student loan default rate is 13.7 percent while in Kentucky it is 17.5 percent. The national student loan default rate declined this year, down from 14.7 percent last year. But Kentucky’s rate last year was 17.3 percent, tied for the state with the sixth highest rate that year. So the state did not improve and fell in the rankings.

The three-year student loan default rate is a calculation of the share of students whose loans enter repayment in a particular year who, within a three-year period, do not pay for at least nine months. Kentucky’s 17.5 percent default rate means that about one in six Kentuckians whose student loans entered repayment in 2011 defaulted within three years.

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Source: Federal Student Aid, U.S. Department of Education

As pointed out in the WFPL article, high student loan default rates are driven by numerous factors—including the effects of the recession meaning a lack of jobs for new college graduates and state budget cuts for higher education that result in tuition increases at Kentucky’s public colleges and universities.

Kentucky’s community colleges have particularly high student loan default rates—with a total default rate of 27.5 percent in 2011, up from 26.4 in 2010 (KCEP analysis of U.S. Department of Education student loan default rate data). In addition to the high costs of college (Kentucky Community and Technical College System schools have the 11th highest community college tuition and fees in the nation), these high default rates likely have much to do with the barriers that community college students face to degree completion. Kentucky’s three-year associate degree graduation rate is just 12.8 percent. The majority of community college students are low-income and most work while attending school (a large percentage working full-time) in order to meet the growing costs of college and often to support families; and Kentucky’s need-based financial aid is poorly equipped to mitigate these costs. The “need to work and make money” is a common reason for students leaving community college before earning a degree.

In addition to the need for greater state investment in higher education—including need-based financial aid—so that students are less likely to go in debt and more likely to earn a degree, it is important that proposals to address the student loan debt crisis at the federal level be taken seriously.

A Full Day of Local Debate on the Minimum Wage, From the Left to the Right

Jefferson Co. Minimum Wage Increase Advances

Louisville Business Owners Push Back Against $10.10 Wage

Report: Min Wage Bump Helps Older Workers

Congressman John Yarmuth Puts Political Weight Behind Louisville Minimum Wage Bill

Study: Local Minimum Wage Hike Would Benefit More Than One in Five Workers, Mostly Full-Time Adults and Women

Louisville Metro Council to Discuss Minimum Wage Tuesday

New Report: More than One in Five Louisville Workers Would Benefit from Proposed Minimum Wage Increase

The increase in the minimum wage under consideration by the Louisville Metro Council would benefit an estimated 22 percent of those who work in Louisville/Jefferson County, as shown in a new Kentucky Center for Economic Policy (KCEP) research brief analyzing U.S. Census data. 62,500 workers who make less than $10.10 would be affected directly, and another 24,800 indirectly once wage scales were adjusted upward.

Contrary to stereotypes, workers who would benefit from the increase are overwhelmingly adults. Ninety-two percent are at least 20 years of age, and there are more workers over the age of 50 who would benefit than there are teenagers. Fifty-three percent of those benefitting are women, and 77 percent of workers whose family income is below the poverty line would get a raise from the increase.

Those workers who stand to gain work most commonly in restaurants and food services, retail stores and health services. Sixty-three percent work full time with the remainder working part time, and impacted workers have a range of education levels. Among those to benefit are an estimated 3,300 veterans.

“The proposed increase would give a much-needed boost to many thousands of low-wage workers whose incomes have been stagnant or declining and are inadequate to provide a decent standard of living,” said Jason Bailey, director of the KCEP and author of the report. “And the increase is supported by an extensive body of research suggesting little to no harm to employment.”

KCEP’s brief is based on analysis of data from the U.S. Census Bureau’s American Community Survey drawing on methods developed by the Institute for Research on Labor and Employment at the University of California Berkeley and the Economic Policy Institute. It is the first report that examines the impact on workers whose place of work is Louisville/Jefferson County and provides estimates for 2017, when the ordinance will be fully implemented. A previous estimate by Oxfam that 61,000 total workers in Louisville would benefit from a national increase in the minimum wage to $10.10 an hour uses similar methodology, but refers only to those who live in the 3rd Congressional District and provides estimates for 2012, among other differences.

The report can be found here: “More than One in Five Louisville Workers Would Benefit from Proposed Minimum Wage Increase.”

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More than One in Five Louisville Workers Would Benefit from Proposed Minimum Wage Increase

iStock_000017243360SmallThe increase in the minimum wage under consideration by the Louisville Metro Council would benefit an estimated 22 percent of those who work in Louisville/Jefferson County, as shown in a new KCEP research brief analyzing U.S. Census data. 62,500 workers who make less than $10.10 would be affected directly, and another 24,800 indirectly once wage scales were adjusted upward.

Contrary to stereotypes, workers who would benefit from the increase are overwhelmingly adults. Ninety-two percent are at least 20 years of age, and there are more workers over the age of 50 who would benefit than there are teenagers. Fifty-three percent of those benefitting are women, and 77 percent of workers whose family income is below the poverty line would get a raise from the increase.

Those workers who stand to gain work most commonly in restaurants and food services, retail stores and health services. Sixty-three percent work full time with the remainder working part time, and impacted workers have a range of education levels. Among those to benefit are an estimated 3,300 veterans.

The proposed increase would give a much-needed boost to many thousands of low-wage workers whose incomes have been stagnant or declining and are inadequate to provide a decent standard of living. And the increase is supported by an extensive body of research suggesting little to no harm to employment.

KCEP’s brief is based on analysis of data from the U.S. Census Bureau’s American Community Survey drawing on methods developed by the Institute for Research on Labor and Employment at the University of California Berkeley and the Economic Policy Institute. It is the first report that examines the impact on workers whose place of work is Louisville/Jefferson County and provides estimates for 2017, when the ordinance will be fully implemented.

The report can be found here: “More than One in Five Louisville Workers Would Benefit from Proposed Minimum Wage Increase”