Small Student Debts, Big Problems

Susan Dynarski, in the New York Times, explains how “borrowers who owe the most are least likely to default. The reason for this strange pattern? The biggest borrowers tend to become the highest earners.”

“This fact about loan defaults is one way in which the national conversation about student debt is at odds with the data. In many people’s minds, the so-called student-debt crisis revolves around graduates of selective colleges or graduate programs who run up six figures in debt.”

“But such borrowers aren’t the real source of trouble. The vast majority of bachelor’s degree recipients do very well. Only 2 percent of undergraduates borrow more than $50,000, and they also aren’t the ones who tend to have problems with their debt.”

“Defaults are concentrated among the millions of students who drop out without a degree, and they tend to have smaller debts. That is where the serious problem with student debt is. Students who attended a two- or four-year college without earning a degree are struggling to find well-paying work to pay off the debt they accumulated.”

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“The United States also has income-based repayment options, but relatively few student borrowers — currently 19 percent of Direct Loan borrowers — are enrolled in them. The people who need these programs the most are not taking them up.”


  1. Owing somewhere between 10-50k in student loan debt is considered doing well? I strongly disagree. At the very least, we should implement Sen. Warren’s proposal to lower the interest rates on student loans to the same rates that the big banks borrow at.

  2. So, penalize the responsible people who pay their bills? Wrong. If the G is going to bring relief, bring it to ALL, period.

  3. The odds are likely that those who do not take advantage of income-based repayment plans simply don’t know about them. Sounds like a good project for the CFPB!

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