A study on student loan default rates by the Brookings Institute found an interesting correlation. Generally students
Question:
A study on student loan default rates by the Brookings Institute found an interesting correlation. Generally students that needed to borrow more money to attend a four-year institution were less likely to default than students with a lower level of debt. Students that started college in 2003 borrowed an average of $15,000 and had a default rate of 17.1%. Breaking down the data, students that completed a four-year bachelor’s degree borrowed an average of $25,000 but had a significantly lower default rate of only 5.6%. Whereas, students that dropped out of college only borrowed $7,500 but had a default rate that was more than four times greater, 23.9%. Use the concept of marginal analysis to explain the student loan default rate data above.
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