cry for this yearís college graduates.
letís change that: You might shed a tear for those who
are struggling to get good-paying jobs in a still
difficult jobs market. But if you think most of the
graduating class of 2015 will be suffocating with
overwhelming student loans, thatís going a bit too
the nationís total amount of outstanding student debt
is at a mind-boggling $1.2 trillion, most students who
graduate with bachelorís degrees donít fit the
stereotype of being burdened by deeply destructive debt.
a study by the Urban Institute shows that few have the
$50,000 in debt highlighted in some news headlines. Most
have debt levels they should be able to handle if they
get the typical starting pay for new college grads. Last
yearís salaries averaged $36,237 for four-year liberal
arts degrees and those in business, engineering and
science fields earned more, according to the National
Association of College Employers.
average pay would allow a student to handle about
$21,000 in college loans under a rule of thumb that
recommends keeping payments no higher than 8 percent of
a personís gross earnings. Try this calculator to
access a particular studentís ability to pay:
mappingyourfuture.org/paying/debtwizard/. For students
without jobs or incomes too low to handle their debts,
the federal government temporarily reduces payments for
Stafford and Perkins loans under the income-based
repayment plan. See the effect of reductions at
the latest Department of Education data analyzed by
Urban Institute, researchers found 54 percent of those
who graduated with bachelorís degrees in 2012 borrowed
no more than $20,000. Another 17 percent borrowed
between $20,000 and $29,999, and an additional 12
percent borrowed $30,000 to $39,999. Only 10 percent
took on the extraordinary debt of $50,000 that sometimes
shows up in stories of woe.
appears that the widespread attention on the dangers of
overborrowing may be making people more careful about
loans. News reports have told of new graduates delaying
marriage, children and home purchases because of their
Sandy Baum and Martha Johnson noted in their Urban
Institute study that after a surge in 2009 and 2010,
student loan borrowing has declined during the past
three years. At the peak just after the recession,
annual borrowing by full-time undergraduates was $6,122.
But during the 2013-14 academic year, borrowing fell to
$5,490. About a third of undergraduate students finish
college with no debt.
massive borrowing at the $50,000 level occurs primarily
among students seeking graduate degrees. That includes
students who might be able to handle higher debts in
fields such as business, law and medicine.
students seeking graduate degrees do have higher burdens
than they did a decade ago. About 37 percent of students
going to graduate school finished with debt of at least
$50,000. The report noted that the percent was double
2004ís. About 14 percent accumulated as much as
$100,000, mostly students seeking doctoral degrees.
the undergraduate level, those most likely to end up
with large debts included students who are married or
with children, who live independently of their parents.
Students who go to for-profit colleges and those who
stay in school for a longer time also had higher debts
families are not more likely than others to borrow large
amounts. Baum said thatís at least partly because
lower-income students attend school for fewer years than
of the students who earn two-year associate degrees
finish without loans, and debt in excess of $30,000 is
institutions have been controversial because they charge
more than public institutions and can leave students
with poor professional outcomes. The students attending
them tend to be older and lower income. The study noted
that 26 percent of students from for-profit institutions
borrowed $50,000 or more for undergraduate study.
the full array of students graduating during the past
three years, the report found "the downward trend
in annual borrowing notable." While the period
could be an aberration, the report said, "it is
also possible that education debt will stabilize or even