Personal Finance

If Supreme Court affirms Biden student loan forgiveness plan, some college 'stopouts' may reenroll

Key Points
  • More students are dropping out of college.
  • Between the high cost of higher education and the strong labor market, some college students are choosing to join the workforce instead.
  • If the Supreme Court lets student loan forgiveness stand, it may bring back students who started college but never finished, a new report finds.
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As of the latest tally, 1.4 million more Americans have dropped out of college — although some "stopouts" may reenroll if the Supreme Court affirms President Joe Biden's student loan forgiveness plan and their education debt is forgiven, a new report shows.

Overall, college enrollment declines have begun to level off, but the number of people who started college and then withdrew rose 3.6% in the 2020-21 academic year, according to the National Student Clearinghouse Research Center. More than 40 million people are currently unenrolled.

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An additional 41% of current college students said they have considered "stopping out," or putting their education on hold, over the past six months, a new study from Lumina Foundation and Gallup found.

"The number of currently enrolled students thinking about stopping out keeps getting higher — that's super concerning," said Courtney Brown, Lumina's vice president of impact and planning.

Financial obstacles lead many to stop out

Between the high cost of higher education and the strong labor market, students are questioning whether going to college is still worth it, noted Ross Gittell, an economist and president of Bryant University in Smithfield, Rhode Island.

"There's concern about that investment upfront when the returns are uncertain," he said.

Among recent "stopouts," most said they put their education on hold due to financial obstacles, including the costs of programs, inflation and the need to work, the report by Lumina and Gallup found.

"It's not just about tuition," Brown said. "The reality is that today's students work, they may have children or parents to support — there's an opportunity cost."

Supreme Court hears arguments in student loan forgiveness fight
Supreme Court hears arguments in student loan forgiveness fight

Struggles for those with student debt, no degree

At the very least, the Supreme Court's pending decision on Biden's student loan forgiveness plan will shed more light on the financial burden of college.

Increasingly, borrowers are struggling under the weight of ballooning student debt balances. Today, borrowers owe a combined $1.7 trillion.

For those who start college but never finish, managing such a hefty amount of debt is especially difficult. "It becomes problematic when the student doesn't graduate or graduate in a timely manner," Gittell said.

If Biden's plan to cancel $400 billion in student loans is blocked, default rates may spike, the U.S. Department of Education has warned.

Already, among borrowers who start college but never finish, the default rate is three times higher than the rate for borrowers who have a diploma.  

Forgiveness could prompt reenrollment

On the flip side, loan forgiveness would reduce that burden, making it more likely that previously enrolled students would reenroll, according to Brown.

"Loan forgiveness could be a key strategy to bring students who have some college, but no degree, back to finish their coursework," she said.

Nearly half, or 47%, of students who stopped their postsecondary education before finishing said they would be very likely to reenroll if some or all their student loans were forgiven, the report by Lumina and Gallup also found.

Meanwhile, college is only getting more expensive. Tuition and fees plus room and board, books and other expenses for a four-year private college averaged $57,570 in the 2022-23 academic year; at four-year, in-state public colleges, it was more than $27,940, according to the College Board, which tracks trends in college pricing and student aid.

Next year, some colleges said they will hike tuition even more, citing inflation and other pressures.

Still, many students and would-be students believe that getting a degree is worth it and continue to borrow to make college possible.

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