Five facts about student loans

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Americans owe about $ 1.5 trillion on their student loans, more than they owe on their credit cards. Rising total student debt, stories of families struggling with six-figure loans, and politicians’ response to student debt anxiety among younger voters have made student debt a high profile issue. To light up that conversation, here are five facts about student loans from one event – Student loans: a look at the evidence – hosted by the Hutchins Center on Fiscal and Monetary Policy in Brookings.

1. Six percent of borrowers owe one-third of outstanding debt.

A very small fraction of all student loan borrowers have very large loans. Six percent of borrowers have debt over $ 100,000, and 2 percent owe over $ 200,000. That 6% owe a third of the $ 1.5 trillion in past due debt. At the other extreme, 18% of borrowers have less than $ 5,000 in student debt. They collectively owe 1% of the outstanding debt.

2. About a quarter of student loan borrowers, who have about half of the debt outstanding, have borrowed for their graduate studies.

Of all households with student debt, only 26% are headed by someone with a graduate degree. While only a small portion of indebted households have a graduate degree, loans associated with graduate degrees account for 50% of total student debt outstanding. On the other hand, 42% of indebted households are headed by a person without a baccalaureate; they represent only ¼ of the total outstanding debt.

Share of borrowers and share of total debt outstanding by level of education

3. The people who owe the most are not the people who default.

Borrowers with graduate degrees have the lowest default rates, despite making up about half of student debt. Higher default rates are more common for students who have attended for-profit institutions. Forty percent of borrowers in for-profit two-year programs default on their loans within five years of starting repayment, and 32 percent of those who went to for-profit four-year programs have defaulted in the same period of time. Among students who have attended public community colleges, about 25 percent are in default within five years of the start of repayment. Defaults are much less common among those who have borrowed to attend public or private four-year nonprofit schools.

Five-year default rate by institution

4. Most bachelor’s degree holders graduate with little or no debt.

Thirty percent of all bachelor’s degree holders graduate debt-free, and 23 percent graduate with less than $ 20,000 in loans. Less than 20 percent of all borrowers owed more than $ 40,000. Among for-profit schools, nearly half of all borrowers owed more than $ 40,000, but only 12% of those who attended four-year public colleges owed the same amount.

Cumulative debt of bachelor's degree holders, 2011-2012

5. Even though financial aid covers the full cost of tuition, many students still borrow to cover living expenses.

Many students not only borrow to cover their tuition and fees, but also to get money to finance the cost of living while they are in school. Urban Institute analysis using the National Post-Secondary Student Assistance Study finds that student borrowing models among those for which all tuition is covered by scholarships and grants (no net tuition fees) are similar to those who have to pay tuition fees. For students in public universities and colleges with no net tuition fees, 22% borrow $ 30,000 or more; on average, they borrow $ 24,000. In comparison, 23 percent of those paying average net tuition fees of more than $ 5,000 borrowed $ 30,000 or more; on average, they borrow $ 28,000.

Debt Held By Borrowers, By Net Educational Attainment

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