In a previous Brookings report (), co-author Jing Li and I highlight the black-white gap in student loan debt among bachelor's degree (BA) graduates, and show how the gap widens in the four years following graduation

The value of computing outcomes across all entrants, not just borrowers, is particularly evident when examining heterogeneity across demographic and institutional subgroups. For example, for the 2003-04 cohort, the default rate among borrowers was about twice as high at for-profits as at public two-year institutions (52 percent versus 26 percent). But since less than half of community college entrants ever borrow, compared with nearly 90 percent of for-profit entrants, this understates the differences between these sectors. For-profit entrants default at nearly four times the rate of community college entrants (48 percent versus 13 percent, see Table 2).

In their analysis of three-year cohort default rates, Looney and Yannelis (2015) highlight the rapid increases in defaults among borrowers in the for-profit sector, and to a lesser extent among community college borrowers. I cut the data by institution type as well as by attainment status and race/ethnicity, two important variables that are unavailable in the Looney and Yannelis (2015) analysis. Table 2 shows 12-year borrowing rates, average amounts owed, and default rates among all first-time students, by each of these subgroups.

The table confirms that the growth in default rates across cohorts has been reong for-profit entrants. In fact, the trends here are even more stark than found by Looney and Yannelis (2015), due in part to the large and rapidly growing differences in borrowing rates across sectors. Among all new students entering the for-profit sector in 2004, nearly half had defaulted within 12 years (47 percent), compared to just 24 percent in the 1996 cohort. The default rate for for-profit entrants is nearly four times the rate seen in other sectors, where only 12 to 13 out of every 100 entrants default. Read more