Student Debt.. By the Numbers

[Axe]

From 1440

Good morning. It's Thursday, July 25, and today we're covering student debt. As millions of high schoolers grapple with whether a college degree is worth the cost, the student loan forgiveness debate is once again heating up ahead of the 2024 US presidential election—making it as good a time as ever to learn the facts about student debt.  —Phoebe Bain, 1440 Business & Finance Section Editor We’d love to hear your impressions of our Business & Finance emails. Share your thoughts here.   Want to watch this newsletter as a video? Click here. Student Debt  Background For decades, higher education has been a key step to middle- and upper-class prosperity for millions of Americans. But the rising costs of a degree—tuition, fees, living costs, and more—have left many with significant debt burdens after leaving school. As of the first quarter of 2024, roughly 43 million Americans held a cumulative $1.6T in federal student debt—a sum equal to the 12th largest economy in the world. Factor in private loans, and the total rises to $1.74T.  The average household with student debt owed around $55K, with estimated payments of $500 per month.  Covering Costs Average annual tuition now ranges from around $10K for an in-state public university to almost $40K for a private institution. Those figures have tripled since 1970, accounting for inflation. When factoring in associated costs like housing and fees, the total cost routinely exceeds $100K for a four-year degree at a public school.  Parental contributions (39%) and scholarships and grants (25%) provide the primary funding for the average academic year (see breakdown). Student loans cover about 10% of the cost—although family contributions include loans parents take out, too.   Data suggest two decades after college, half of borrowers still owe an average of $20K on their loans. Who Owes The Most? The distribution of total student debt—who owes what and how much—is highly skewed and depends on several factors.  About 15% of borrowers owe less than $5K, and one in three has less than $10K in outstanding student debt. Conversely, 7% of borrowers owe more than $100K yet account for 40% of all outstanding federal debt. See tables here (“Portfolio by Debt Size”).  A quarter of borrowers were enrolled in graduate programs but account for half of all outstanding debt. For those pursuing law or medical degrees, the average student debt is nearly $190K—about six times that of average bachelor's degree debt.   Millennials and Gen Xers currently hold the bulk of outstanding student debt. Those aged 25 to 49 owe more than $1.1T, or 70% of all outstanding federal loans.  Racial disparities in borrowing remain, most notably in the length of repayment. One long-term study found the median Black borrower still owed 95% of the loan amount two decades after graduation (note: the cohort tracked entered school in 1996-97).  As of 2021, roughly 3 million borrowers (about 7%) defaulted on their debt. That number was down from a 2016 peak of around 5 million. Future Americans' total amount of outstanding student loans now exceeds the country's credit card debt ($1.3T). Some economists argue the burden creates a net drag on the economy.   Partial or total outstanding loan forgiveness has become a hotly debated policy issue, with advocates arguing it would have positive economic benefits and critics countering it disproportionately helps upper-income households (see overview).

Explore Student Debt Student Loan Calculator Interest rates on federal student loans range from around 6.5% for undergraduates to above 9% for loans parents took out (private loans can exceed 17%). What interest rate a borrower gets determines how quickly the amount owed grows. Find out how to estimate what your monthly payments would be for different rates and payback periods with this calculator.  Is College Worth It? Higher education has long been viewed as a stepping stone to more stable and lucrative careers, with estimates suggesting a college degree nearly triples average lifetime earnings. Yet only 22% of Americans say college is worth taking out loans for. To explore whether college is a good return on investment or not, dig into this survey data from Pew Research. Play the Game of College In this game about college affordability, play the role of a student as you navigate your way through college as debt-free as possible. This simulator lets you select different income levels, race and ethnicity, and more. How does meeting with a counselor alter your trajectory? Should you emphasize extracurriculars or test scores? Take your own journey here. The Trillion-Dollar Question Experts join the "Freakonomics" podcast to discuss the student debt crisis. This episode digs into how we got to this point, whether college is worth borrowing for, what we can do to address the economic drag of student debt, and whether alternative routes to a four-year degree could be part of the solution. Listen here.

[MLD Woody]

Neat 

[Axe]

@mld-woody said:

Neat 

1440 is unbiased. It's my primary news source. They tell you what happened. You decide why. This is from their weekly business and finance offering.

Can't recommend this daily news source highly enough..

[hammertime]

It’s definitely on my scope of news!!

[Canton Dawg]

Yep…I get 1440 six days a week.

[Vambo]

[DieHardBrownsFan1]

Anything that doesn't spout liberal bullshit is right wing according to pecker head and ccc u n t.

[Axe]

I've never seen any semblance of political slant with 1440.. They tell you what happened and let you figure out why.... It's why it's my go to read with my morning coffee every day save Sunday.

It's called 1440 because there are 1440 minutes in a day

[Ibleedbrown]

I accidentally went to my alumni weekend about a month ago. An old college buddy was in town and invited me to a thing in Oxford, Oh. I didn’t realize it was an alumni weekend thing until l got there. It was kinda cool seeing the normally sleepy summertime town of Oxford all lit up. 

While there l found myself engaged in a convo with an about-my-age fellow Redhawk, but with a doctorate, and she was a proponent of student loan forgiveness.

My official position thus far is that being on the hook to pay back student loans serves as an “adulting” and “skin in the game” mechanism, and l am a believer in those things. I think they are positive motivators.

A lot of the student loan forgiveness thus far has mostly been for undergrad loans, and her position was that it should apply to her post undergrad loans as well based on her time repaying them and that she does work in underserved communities. It was a compelling argument.

Ultimately, l would be in favor of student loans being run like a true non-profit where the goal is to break even.

There’s going to be costs involved to even have student loans, you gotta pay people to administer the program and answer the phones and such. 

Peanut butter and mayo sandwiches are actually pretty good. 

[Vambo]

I think all Democrats should pay off student loans.

[calfoxwc]

lipstick on a mean, ugly boar.

The truth is, student loan forgiveness - bailout via TAXPAYER MONEY -

is a dishonest election vote getting gambit.