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Borrowers Who Drop Out is an important contribution to the National Center's and the nation's understanding of students who aspire to earn educational certificates and degrees, but do not achieve their goals-and yet are saddled with significant debt to repay. It is the first report we know of that compares students who borrow and then drop out of postsecondary education with those who borrow and complete their degrees.

The authors are Lawrence Gladieux, an independent education policy consultant, and Laura Perna, assistant professor of higher education at the University of Maryland, College Park. These researchers utilized the most recent and comprehensive data available from the U.S. Department of Education on students who first enrolled in postsecondary education in 1995-96, with a snapshot of the same students in 2001. The findings are revealing, if not disturbing. Half of the students who enrolled in postsecondary education borrowed in 1995-96; more than 20% of those students dropped out of their educational programs, yet were burdened with significant debt. They had, in effect, the worst of both worlds-they did not benefit from the higher income associated with education beyond high school, and they accumulated significant educational debt. Many of these students were unemployed in 2001 and defaulted on their loans, thus damaging their credit standing for the future.

Most students benefit from loans and are able to repay them when they leave higher education. However, borrowing, combined with other risk factors for not completing higher education (such as working too many hours, lack of adequate preparation, and part-time attendance), puts many students, especially low-income and first-generation students, at a particular disadvantage. The authors raise important policy questions about whether the system of financing higher education is appropriate. We believe that these questions and the recommendations from the authors deserve serious attention. There are, of course, many legitimate points of view about how to best support students financially. However, requiring students to assume significant financial risks so early in their educational careers poses a barrier to educational opportunity for many low-income and first-generation students.

The National Center would like to thank The Lumina Foundation for Education for its support of this project, as well as the advisory committee members who reviewed drafts of this report: Jacqueline King, John Lee, Michael McPherson, Derek Price, Richard Wagner, and Thomas Wolanin. In addition, the National Center thanks Jerry Davis, retired program officer of the Lumina Foundation, for his support and review of this report. The contents of this publication do not necessarily represent the views of Lumina Foundation for Education, its officers or staff.

Joni Finney
Vice President
The National Center for Public Policy and Higher Education


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