Chronicle of Higher Education - web daily - July 28, 2000
Most Student Borrowers Pay Off Loans Within 4 Years, Study Finds By VASUGI V. GANESHANANTHAN
A federal report on students' debt burden shows that most students have either paid off their loans or are on track to do so four years after they graduate. Not surprisingly, however, low-income students had the toughest time, according to the study, which was released Thursday.
The report by the National Center for Education Statistics, "Debt Burden Four Years After College," examined the debt loads of those who graduated with bachelor's degrees in 1992-93, and reviewed their progress four years later. It compared borrowers with nonborrowers in various categories, including "how borrowing affects specific lifestyle choices such as family formation, buying a home or car, and saving."
Half of the bachelor's-degree recipients had borrowed money -- an average of a little more than $10,000, with those who attended private institutions sinking farther into the red than their public-institution counterparts ($12,800 to $8,600, on average). Of the 28 percent who pursued graduate education, half had to borrow.
By 1997, 62 percent of the graduates were free of debt, 46 percent had never borrowed as either undergraduate or graduate students, and 16 percent had paid off their loans or been forgiven. The rest were in various degrees of debt, but most of them were well-positioned to pay off the loans, according to the report.
In 1996, 18 percent of the undergraduate borrowers had incomes of less than $20,000, indicating that their debt burden might be more difficult to bear. According to the report, by 1997, undergraduate borrowers who had not gone on to graduate school and made less than $20,000 had median debt payments equaling 10 per cent of their monthly income.
"Assuming that graduates might need 25-30 percent of their income for rent, an education debt higher than 10-15 percent would probably not be considered manageable," the report says.