This more or less tracks with a central hypothesis I’ve had for a while:

Defaults, esp for African American borrowers are driven by disparities in servicing outcomes and not just debt to income imbalances. https://twitter.com/thesbpc/status/1323315032017506304

Functionally, “default” as is commonly understood is a misnomer for federal student loans because of the technical features of the product which more or less obviate the need for the concept.

These features are not just deferment and IBR but also things like the states ability to garnish wages that circumvent payment structures.

As such. It’s important to think at other metrics such as rehab rates or loss rates on defaulted student loans which in many cases can be well over 100%.

The excess spread below is the real default rate whereas the spread above should be construed as a hidden “tax” on those whose cash flow contributes to it.

Another hypothesis is that tax has some wild disparities in terms if who pays it.

And of course, all of this speaks to why the current method of evaluating student loan performance should look at *cash flows* and not just aggregate borrower statistics.

Also. Speaks to why this policy proposal from @collecamp about ending defaultshould be talked about more. http://perspectives.acct.org/stories/ending-student-loan-default-can-help-students-find-success-at-community-colleges