Research in Higher Education

, Volume 17, Issue 1, pp 3-14

First online:

National direct student loan defaulters: The ability to repay

  • Jon HesseldenzAffiliated withUniversity of Kentucky
  • , David StockhamAffiliated withUniversity of Kentucky

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The purpose of this study was to determine if there is any difference between the incomes of student borrowers who repay National Direct Student loans and those who do not. The incomes of 681 NDSL borrowers (564 repayers and 117 defaulters) were obtained anonymously from state income tax records. The results showed no difference in the disposable income of repayers and defaulters. A disproportion in the representation of repayers and defaulters in the income tax records, indicating a significantly greater out-migration from the state of defaulters than repayers, clouds the validity of generalization of this study. These findings indicate that student loan default is motivated by factors other than lack of financial resources and are consistent with earlier findings.