Student Debt
Student loan debt is an increasingly hot topic as the amount of student loan debt increases year after year. Lawmakers, policy experts, students, and families are all looking at the issue and determining how it should be addressed. Here are the facts:
- Total student loan debt, as of December 2020, is $1.7 trillion, including both federal and private loans. There are 44.7 million borrowers.
- 2019-2020 data show that only 14 percent of students took out private loans.
- Borrowing rates are higher in areas with a majority of black residents, at 23%, compared to 17% in Hispanic-majority zip codes and 14% in white-majority zip codes.
- As of March 2020, 45% of the outstanding federal education loan debt was held by the 10% of borrowers owing $80,000 or more.
- Student loan debt is the second largest debt, aside from a mortgage, in a household.
- 83% of borrowers have a loan balance of $50,000 or less.
- Students and families with higher student loan balances were more likely to own their homes.
- Average debt per borrower among all bachelor's degree recipients at private, nonprofit institutions in 2018-19 was $33,700.
Contrary to public perception, it is not the students with the largest loans who are unable to repay them. Very large loans are most often taken out for professional degrees and are repaid because the borrowers have higher incomes upon graduation. Rather, the borrowers who experience the most difficulty repaying their loans commonly have small (under $5,000) loan balances, and did not complete a certificate or degree program.
Numerous press accounts suggest that student debt results in borrowers’ delaying important life activities, such as starting families and buying homes. This question requires further exploration, but research by Beth Akers, then of the Brookings Institution, suggested no long-term negative effect.
The Department of Education reported in September 2020, that average 3-year overall cohort default rates for 2017 decreased slightly from the three prior years to 9.7%. It remains to be seen if this is a long-term trend—as the economic recovery and the growth in alternative repayment options may have played a role.