Student Debt

Student loan debt is receiving a great deal of public attention.  Here are the numbers:  

  • In 2015, nearly 38% of borrowers (undergraduate and graduate students across all sectors of higher education) owed less than $10,000 and 66% owed less than $25,000.

  • Slightly over five percent of all borrowers (undergraduate and graduate students across all sectors of higher education) have student debt of $100,000 or more.
  • Average debt per borrower among all bachelor degree recipients at private colleges in 2014-15 was $31,400.
  • Total national student debt is $1.2 trillion.  However, much of that debt is due to an increased number of Americans who went to college during the recent recession.    

Contrary to public perception, it is not the students with the largest loans who are unable to repay them.  Very large loans are most often taken out for professional degrees and are repaid because the borrowers have higher incomes upon graduation.  Rather, the borrowers who experience the most difficulty commonly have small (under $5,000) loan balances, and did not complete a certificate or degree program.    

Numerous press accounts suggest that student debt results in borrowers’ delaying important life activities, such as starting families and buying homes.  This question requires further exploration, but research by Beth Akers of the Brookings Institution suggests no long-term negative effect.  

The Department of Education reported in September 2016, that average 3-year overall cohort default rates for 2013 decreased slightly from the three prior years to 11%.  It remains to be seen if this is a long-term trend—as the economic recovery and the growth in alternative repayment options may have played a role.  


The issue of student loan debt has captured significant public and press attention. That student loan borrowing has reached $1.2 trillion, surpassing credit card debt, is note-worthy and should not be ignored.  However, although individual borrowing has increased, the total amount of borrowing has also been driven by an increase in the number of borrowers who returned to school or needed assistance during the recession, and by growing numbers of graduate students. 

Policy Questions

The attention being given to student debt levels has prompted a variety of policy responses—including proposals related to federal loan limits, the provision and timing of loan subsidies, and repayment options.  

Loan limits:  Higher Education Act (HEA) reauthorization proposals to reduce federal loan limits could force many students into more expensive private loans.  

In-school interest subsidies:  Proposals to charge low-income students interest while they are in school would cost students thousands of dollars in a program in which the federal government is already making a profit.  There is a growing debate about whether it is better to direct loan subsidies more in the front end, based on students’ family income, or the back end, based on debt loads and earnings after students graduate.    

Repayment options:  The major efforts to reduce the burden of repayment have been on the back end of the process, i.e., the creation of repayment systems that are based on borrowers’ income and loan forgiveness for public service. Most recently, these options became available for more borrowers. Regulations for the most recent of the several plans, Revised Pay As You Earn (REPAYE), provide an income-driven repayment option for borrowers regardless of their economic situation.  Some policy makers argue that institutions should have the ability to limit student borrowing if they are to be held liable for high cohort default rates through risk-sharing

What You Can Do 

  • Know how much your students are borrowing.
  • Evaluate your entrance and exit counseling efforts to encourage students to borrow wisely, and be vigilant in understanding repayment requirements (particularly those related to annual renewal requirements for income-driven repayment options).
  • Let your Senators and Representative know of your support for efforts to:

    * Encourage on-time completion;
    * Maintain clear and reasonable repayment options.
    * Protect the in-school interest subsidy; and
    * Keep interest rates and fees low;


NAICU Contact

Emmanual Gillory: