Federal Reserve System
Federal Reserve Report: Student Borrowing May Lead to Rural Brain Drain
By MorraLee Keller, Director of Technical Assistance, NCAN
We know that job opportunities in rural areas are relatively scarce in comparison to the number of jobs available in urban areas. New data from the Federal Reserve show how this reality affects the migration patterns of rural college graduates who took on debt. This so-called “rural brain drain” will likely have a long-term economic impact on these communities.
Here are some of the report’s key findings about rural student borrowers:
- Individuals with student loan debt are less likely to remain in rural areas than those who are debt-free.
- Individuals in the highest quartile of outstanding student loan balances are the most likely to leave rural areas.
- Rural students who moved to urban areas fared better across several economic measures than those who stayed in rural areas, including student loan delinquency rates and balance reduction.
- The college attainment gap between rural and urban populations grew from a 4.8 percentage point disparity in 1970 to a 14-point gap in 2015.
These data come from the Equifax/Federal Reserve Bank of New York Consumer Credit Panel, which tracked a nationally representative, 5 percent sample of all adults with a Social Security number and a credit report.
This report includes data that provide additional perspective on the rural landscape. Here are some high-level data points from this 5 percent sample:
- Only 52 percent of rural students with debt still lived in rural areas six years later, compared to 66 percent of non-borrowers who remained.
- Rural borrowers in the top debt quartile are 34 percent less likely than their peers in the bottom quartile to remain in rural areas.
- Rural students who move to metro areas are more likely to pay down their debt quickly, less likely to be delinquent, and more likely to take out a mortgage.
The challenges of getting rural students to pursue postsecondary education are significant. And we hear from rural parents that they want a college opportunity for their child, but know it could lead to that child not coming back to their community upon completing a degree. It is essential that we consider these truths as we continue to serve our rural students on their path to and through higher education.
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