The cost of attending a four-year college or university is staggering. In 2011, the most recent U.S. News and World Report showed that the top 60 postsecondary educational institutions cost well in excess of $40,000 annually to attend, requiring many students to take on vast debt early in adulthood. Those who drop out not only have to repay the loans, they must do so without the benefit of a college education.
Student Loans
Just because you haven't earned your degree, that doesn't mean you don't have to repay your student loans, according to the website StudentLoansForCollege.org. It doesn't matter if your loan is a private loan or is federally guaranteed; it still has to be repaid. Federal and private student loans usually give ex-students a six-month grace period before the repayment period starts. Your education lender won't go away if you can't repay the loans; student loans are one of the very few types of loans that won't be discharged, even if you declare bankruptcy.
Financial Aid
In 2008, the Department of Education announced that students who received Pell Grants and then decide to drop out must repay the money. Despite the concerns of educators who feel that students may be afraid to accept the aid if they're concerned about paying it back, the government wants students to "earn" the aid by completing their degrees, according to the website FastWeb.com. The amount that a student may owe is based on a refund calculation formula that takes into account when in the semester the student quits.
Who's Most Affected
The National Center for Public Policy and Higher Education sponsored a study in 2005 that examined students who dropped out of college prior to graduation, and the study reported some disturbing trends. It revealed that students who worked too many hours during the semester, didn't adequately prepare or attended part-time had a disproportionately high risk of dropping out -- and owing debt toward the degree they hadn't earned. According to the study's authors, low-income and first-generation college students shared the highest percentages of this population.
Average Debt Load
According to the same study, students who completed a four-year degree averaged between fifteen and twenty thousand dollars in education-related debt. Despite this, most students who complete their degrees are able to repay the loans with the earnings from the jobs they win after graduation. The study found that the one-fifth of borrowers who dropped out of school were ten times more likely to default on their loans. For these adults, the road to success may be long and steep.
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