Author(s)

Emmanuel Obilor Njoku^1,2

¹North Central University, San Diego, USA.
²Wayne County Community College District, Detroit, USA.

Community colleges serve more than a considerable proportion of Americans who could not otherwise attend colleges by providing access to fulfill their educational goals. Many of the students enrolled in the institutions look to the federal government to finance their educational expenses by obtaining federally guaranteed student loans. The borrowers who default on their student loans cut across race, gender, and age, with Blacks and Hispanic American males more likely to default. The research problem addressed in this quantitative correlational study was the high cohort default rates at 26 public 2-year community colleges in Michigan. The high cohort default rates present problems to the institutions’ ability to generate revenue to meet educational budgets. The purpose of this quantitative correlational study was to identify variables associated with student loan default in the 26 public 2-year community colleges in Michigan. The study was guided by the conceptual framework of the student-institution fit model, focusing on individual student attributes and institution-level variables that accounted for the willingness to repay behavior. A quantitative methodology with a nonexperimental design was used to address the research questions. Secondary data were extracted from the National Student Loan Data System and the Integrated Postsecondary Education Data System. The results for all the research questions showed that the assumptions of normality, homoscedasticity, and absence of multicollinearity tests were met, and null hypotheses were not rejected. The study’s findings showed that institution-level factors did not significantly predict student loan default among borrowers but rather individual characteristics. I recommended future research to explore default patterns among borrowers in public 2-year community colleges after the COVID-19 crisis in terms of federal government policies that could result in a recommendation for practice for institutions. The practice recommendations included institutions developing a financial aid education and outreach program, a default prevention guide, and special attention to students eligible for Pell Grants.

Michigan, Student Loan Debt, National Data, Federal Financial Aid, Variables Affecting Student Loan Default, Repayment, Age, Gender, Ethnicity/Race

Njoku, E. (2023) Managing Factors That Correlate to High Cohort Default Rate at Public 2-Year Community Colleges in Michigan. Journal of Financial Risk Management, 12, 328-365. doi: 10.4236/jfrm.2023.124018.