Student Loan Debt

This from CSPAN:

This from American Student Assistance:

Here are some important facts about the state of student loans in the United States today:

How many Americans borrow/have borrowed for college?

• Nearly 20 million Americans attend college each year. (Source: Chronicle of Higher Education)

• Of that 20 million, close to 12 million – or 60% - borrow annually to help cover costs. (Source: Chronicle of Higher Education)

• There are approximately 37 million student loan borrowers with outstanding student loans today. (Source: Federal Reserve Board of New York)

• As of the first Quarter of 2012, the under 30 age group has the most borrowers at 14 million, followed by 10.6 million for the 30-39 group, 5.7 million in the 40-49 category, 4.6 million in the 50-59 age group and the over 60 category with the least number of borrowers at 2.2 million for an overall total of 37.1 million. (Source: FRBNY)

How much do Americans borrow/have borrowed for college?

•There is roughly somewhere between $902 billion and $1 trillion in total outstanding student loan debt in the United States today. The Federal Reserve Bank of New York reports $902B while the Consumer Finance Protection Bureau reports $1T.

•Roughly $864 billion is outstanding federal student loan debt while the remaining $150 billion is in private student loans(Source: Consumer Finance Protection Bureau). Private student loans are not made or backed by the federal government.

•As of Quarter 1 in 2012, the average student loan balance for all age groups is $24,301.  About one-quarter of borrowers owe more than $28,000; 10% of borrowers owe more than $54,000; 3% owe more than $100,000; and less than 1%, or 167,000 people, owe more than $200,000. (Source: FRBNY)

•In 2010‑11, about 57% of public four‑year college students graduated with debt. They had borrowed an average of $23,800 (in 2011 dollars). About two‑thirds of those earning bachelor’s degrees from private nonprofit institutions had debt averaging $29,900.(Source: College Board)

•As of October 2012, the average amount of student loan debt for the Class of 2011 was $26,600, a 5 percent increase from approximately $25,350 in 2010. (Source: The Project on Student Debt)

Who borrows/has borrowed?

Among all 2007-08 bachelor's degree recipients:
• 66% graduated with some education debt, while 10% had borrowed $40,000 or more.
• 62% at public four-year institutions borrowed.
• 72% at private nonprofit four-year institutions borrowed.
• 96% at private for-profit institutions borrowed.
Associate’s degree and certificate recipients, 2007-08:
• 38% of associate’s degree recipients at public institutions borrowed.
• 98% of associate’s degree recipients at private for-profit institutions borrowed.
• 30% of certificate recipients at public institutions borrowed.
• 90% of certificate recipients at private for-profit institutions borrowed.
Among students who earned graduate degrees in 2007-08:
• 26% had no education debt at all.
• 14% had undergraduate debt but no graduate school debt.
• 7% had borrowed $80,000 or more for graduate school.
• 5% had borrowed between $60,000 and $79,999.
(Source: The College Board)

The majority of borrowers still paying back their loans are in their 30s or older. Of the 37 million Americans with outstanding student loan debt:
• Almost 40% of these borrowers are under the age of 30.
• Nearly 42% are between the ages of 30 and 50.
• 17% are older than 50.
• Borrowers age 30-39 carry $307 billion in student loans, followed by those under 30 at $292 billion, $154 billion in the 40-49 age group, 50-59 at $106 billion and the over 60 category carrying $43 billion, for a total outstanding debt of $902 billion.
(Source: FRBNY)

How many student loan borrowers struggle with repayment?

• Of the 37 million borrowers who have outstanding student loan balances, 14%, or about 5.4 million borrowers, have at least one past due student loan account.

• Of the $870B-$1T in outstanding student loan debt, approximately $85 billion is past due.
(Source: FRBNY)

• The official FY 2010 two-year national student loan cohort default rate rose to 9.1 percent, up from 8.8 percent in FY 2009, while the three-year rate declined slightly from 13.8 percent to 13.4 percent.  (Source: U.S. Department of Education)
• Only about 37 percent of federal student loan borrowers between 2004 and 2009 managed to make timely payments without postponing payments or becoming delinquent.

• For every student loan borrower who defaults, at least two more borrowers become delinquent without default.

• Two out of five student loan borrowers – or 41%- are delinquent at some point in the first five years after entering repayment.

(Source: Institute for Higher Education Policy)

• As of 2012, there are now more than $8 billion in defaulted private loans, or 850,000 distinct loans in default. (Source: CFPB)

Who struggles most?

• As of early 2012, borrowers in their 30s have a delinquency rate (more than 90 days past due) of about 6%, while borrowers in their 40s have a delinquency rate double that, at about 12 percent. Borrowers in their 50s have a delinquency rate of 9.4% and those over 60 have a delinquency rate of 9.5%.(Source: Federal Reserve Bank of New York Consumer Credit Panel)

Students who drop out of college before earning a degree often struggle most with student loans:
• From 2004 to 2009, 33% of undergraduate federal student loan borrowers who left without a credential became delinquent without defaulting and 26 percent defaulted, vs. 21% with a credential who became delinquent without defaulting and 16% who defaulted.(Source: IHEP).
And the number of drop-outs is on the rise:
• Nearly 30 percent of college students who took out loans dropped out of school, up from fewer than a quarter of students a decade ago. (Source: Education Sector)
• More than half of students who take out loans to enroll in two-year for-profit colleges never finish. At traditional nonprofit and public schools, the percentage of students with loans who started college in 2003 and dropped out within six years is about 20 percent. (Source: Education Trust)
Type of institution attended can also make a difference:
• From 2004-09, a third or less of federal student loan borrowers at four-year, public or private nonprofit institutions became delinquent or defaulted on their loans, while nearly half or more (45 percent and 53 percent, respectively) of their borrowers were making timely payments on their loans.
• One-quarter to one-third of borrowers at for-profit and public two-year institutions were making timely payments on their loans, and more than half of all borrowers in these sectors were delinquent or had already defaulted.
(Source: IHEP)

Why do they struggle?

• 48% of 25-34 year-olds say they’re unemployed or under-employed.
• 52% describe their financial situation as just fair.
• 70% say it has become harder to make ends meet over the past four years.
• 42% of those under 35 have more than $5000 in personal debt that does not include a mortgage.
• Student loans account for the most common form of increasing debt among ages 18-24 (54% have seen increased school loan debt) while those in the older group attribute increased debt equally to school loans (37%) and credit cards (37%).
(Source: Demos and Young Invincibles)

How well do students and alumni understand their options to minimize borrowing and manage the debt once they have it?

• As of 2012, only 700,000 borrowers had enrolled in Income-Based Repayment (Source: Project on Student Debt), but the Obama Administration estimates that IBR could reduce monthly payments for more than 1.6 million student borrowers. (Source: White House Fact Sheet)
• About 65 percent of high-debt student loan borrowers misunderstood or were surprised by aspects of their student loans or the student loan process. (Source: Young Invincibles)
• Approximately one-third of recent grads, if they could do it all again, would have pursued more scholarships or financial aid options, pursued a major that would have led to a higher paying job, or gotten a job while in college and started saving earlier. (Source: Accounting Principals)

How is student debt impacting borrowers - and the U.S. economy?

A college degree does increase an individual’s potential for earnings:
• In 2010, people ages 25 to 34 with bachelor's degrees earned 114 percent more than did those without high-school diplomas.
• College graduates earned 50 percent more than did young adults who completed only high school, and 22 percent more than did those with associate degrees.
• The median income for young adults with a bachelor's degree was $45,000, and with an associate degree, $37,000
(Source: National Center for Education Statistics)
But student debt can also negatively impact an individual’s ability to take on other consumer debt – and therefore place a drag on the national economy:
• In 2011, first-time home buyers, with a median age of 31, fell to the smallest percentage of total home purchasers since 2006. (Source: National Association of Realtors)