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Abstract

The Perkins Loan Program was established in 1958 by the federal government to create loans for financially needy students. This program is one of many student loan programs that has come under heavy scrutiny in recent years because of high default rates. There are relatively few studies to help university administrators identify borrowers likely to default and almost no predictive models to assess the default probabilities of individual borrowers. This project analyzes several characteristics of University of Dayton student borrowers to discover their relative impact on whether or not a student defaults. Further, a model is developed to help predict those students who will potentially default on their Perkins Loans. Financial aid policy recommendations aimed at reducing default costs at the University of Dayton are made based on that model.

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