Department of Consumer Affairs Releases Report Examining the Factors Contributing to Student Loan Distress Across New York City Neighborhoods

November 1, 2018

• The report identifies seven indicators of vulnerability to default that provide context about student loan distress in New York City and can be used to target services.
  DCA found that areas with high levels of debt in collections also tend to have high occurrence of the vulnerability indicators. These neighborhood-level indicators include non-completion, part-time attendance, attendance at a for-profit, age, low income, black residents, and Hispanic residents.

• Student loan debt distress is particularly severe in The Bronx.
  DCA’s report finds that The Bronx has the highest rate of non-completion in the city, 42 percent, compared to Staten Island, the lowest at 31 percent. Less than half of students living in The Bronx who began their studies in the 2010 school year had completed a degree in 2017, seven years later. In addition to this, The Bronx has the highest rate of New Yorkers with student loan debt in collections and has the highest rate of students attending for-profit institutions. This report demonstrates a strong need to promote affordable options such as community colleges in The Bronx and other parts of New York City as an alternative to for-profit schools to help the most at-risk students avoid student loan debt distress before they even enroll.

• Non-completion is one of the strongest drivers of loan default in New York City.
  Research has shown that non-completion is one of the strongest drivers of student loan default and that non-completion is more concentrated among students with low incomes and students of color. In addition to finding a strong relationship between student loan holders with debt in collections and non-completion, DCA’s report found strong relationships between non-completion and the other six indicators known to be predictive of student loan default – especially attendance at for-profit schools.
  
  Neighborhoods in The Bronx exhibit the strongest associations between rates of non-completion and rates of student loan debt in collections, with similar patterns seen in the Brooklyn neighborhoods of Bedford-Stuyvesant, Brownsville, Ocean Hill, East New York, and Starrett City, and the Manhattan neighborhoods of East Harlem and Central Harlem. Innovative solutions are needed to help these vulnerable groups – older students, students of color, and students from low-income backgrounds – complete their degrees in the shortest amount of time possible. This will help to reduce debt accumulation and ensure these students receive a positive return on their investment in higher education.

• Older students, students from neighborhoods with low incomes, and black and Hispanic students attend for-profit schools at a higher rate.
  DCA selected for-profit college attendance as an indicator for loan default due to these colleges’ longstanding history of predatory practices, high tuition, low graduation rates, and the low amount of money spent on instruction. DCA’s research demonstrates that, as the percentage of college students in a neighborhood attending a for-profit institution increases, so does the neighborhood’s rate of student loan borrowers with debt in collections. The highest rates of attendance at for-profit schools are in the Bronx, among older students, black and Hispanic students, and students from neighborhoods with low incomes – all communities with higher rates of loan distress. DCA’s research also finds that for-profit institutions are underserving students over the age of 24 based on the dramatically lower graduation rates for these students compared to their peers attending two and four-year public institutions.