These Are The People Struggling The Most To Pay Back Student Loans
The country is in the middle of a student loan debt crisis. The debt equals more than $1.6 trillion from more than 45 million borrowers.
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Those who default on these loans are from certain groups, and it’s not who one might suspect.
“The large debts we hear about are often taken out by graduate students — people who get an MBA or who get an M.D. or get a law degree or get a master’s,” says Susan Dynarski, an economist at the University of Michigan. But borrowers aren’t the main one defaulting on their loans.
“Neither are borrowers who got their bachelor’s degree — who on average have about $30,000 in loans after graduation. For many of those borrowers, the loans did their job: They allowed students to go to college, get their degrees, land a better job and, ultimately, pay back those loans,” NPR reported.
There are nearly 1 million borrowers who default on their student loans annually, according to the latest numbers from the U.S. Education Department.
“The typical defaulter has under $10,000 in debt,” said Ben Miller, vice president for postsecondary education at the left-leaning Center for American Progress.
Dynarski added: “The people having problems with their debts are those who dropped out of school after just a few courses or a year.”
Borrowers who didn’t complete their degree default at a rate that is three times as high as the rate for borrowers who did complete.
Race places a factor too. According to federal data, half of African American borrowers with student loans for the 2003-2004 school year defaulted after 12 years.
“Because Black students have less generational wealth on average, experts say, they’re more likely to borrow in the first place. They’re also more likely to attend for-profit schools, and they often earn less money after college. Even African American borrowers who graduate with a bachelor’s degree still default about four times more often than their white counterparts,” NPR reported.
“In other words, the bachelor’s degree can’t completely wipe away issues related to race,” Miller says.
Also, low-income students who receive a Pell Grant are more likely to default.
“When the government looked at the default rates for student borrowers, they found it was nearly double at for-profits what it was at community colleges: of defaulters, just 26% started at community college, while 52% attended a for-profit institution,” NPR reported.