90% of College Graduates Have Less Than $40,000 In Student Loans?

The NY Times Economix blog had a provocative post a few days ago about student loan debt, pointing out a government study that showed that 90% of bachelor degree holders had less than $40,000 in student loans shortly after graduating.

The chart below, using data taken from the Beginning Postsecondary Students Longitudinal Study (BPS) by the Department of Education, shows the percentage of beginning undergraduate students who, six years later, had accumulated more than the indicated levels of debt. One bar is for college entrants, and the second is for the ones who actually received a bachelor degree in that timeframe.

  • In a follow-up, the author clarifies that the study includes both federal loans and private loans via student survey.
  • The study does exclude PLUS loans (Parent loans). About 15% of bachelor’s degree recipients have parents who took out PLUS loans.
  • The chart does not include loan debt from graduate school.
  • The chart does not include credit card debt incurred during school. According to a 2009 survey by Sallie Mae, the average student leaves college with $4,100 in credit card debt.
  • The chart does not include other debt (home equity loan) taken on to pay for education.
  • Debt amounts may grow over time as interest accumulates.

Only 10% with more than $40k in student loans? Only 1% with more than $75k? That’s still a lot of money, but somehow seems less than I would have imagined. I could have easily left school with more than $40k in loans, and that was a decade ago.

I feel like something is missing. Perhaps part of it is the exclusions I listed above. Perhaps I’m thinking about how fast student loan debt is growing overall. In 2010, there became more student loan debt outstanding than credit card debt for the first time. Via Fastweb:


  1. This doesn’t surprise me at all. Student loan articles usually have statements like “The average student loan debt is $$$$$.” First of all, many, many students have no debt whatsoever because their parents pay for college. (Only 30% of people get college degrees, and they’re obviously the richer 30%.) Second, we all know average isn’t a very useful stat because it’s so easily skewed. A small % are accumulating massive amounts of debt and they skew the average statistic.

  2. Actually, I don’t think anything is missing.

    If you think about it, the most expensive classes at any given university are graduate level classes. Graduate debt should never be included in any student loan statistics.

    Graduate degrees are not mandatory, at least at first; they are a personal choice. You can argue the same for bachelors, but in reality you need a bachelors degree to get a FT job.

    For M.D.s and lawyers, you know what you’re getting into.

    I think the point of this is that even though debt is growing, it is still manageable.

  3. This is absolutely true. I’ve seen similar data from other sources before.

    THis kind of trend has existed for many years. Very small % of students have very large amounts of loans.

    Of course if you read news articles they make it sound like most students owe >$100k but its simply not the case.

    They are excluding grad school and professional school so this is just undergrad debt. Grad/prof loan balances tend to be much higher on average.

  4. “Perhaps I’m thinking about how fast student loan debt is growing overall. In 2010, there became more student loan debt outstanding than credit card debt for the first time.”

    This statement is true, but keep in mind that there is a lot more people going to college and getting degrees now. Which because of this, the “weight” of a college education has started to diminish and become a standard hiring bullet. If HR puts out a job posting and 80% of the applicants have a degree, the applicants need to either have graduate level education (more money) or more experience.

  5. Most students (70%) go to public universities which are much cheaper. In total most public universities would cost $60,000 to $100,000 for 4 years. So for most students it would be very hard to even spend >$100k in 4 years for a bachelors. Most students (65%) qualify for financial aid. Half of students get grants (free money). Most students get some money from relatives and have their own money. Many students (39% by one stat) lived with their parents during college so didn’t incur room/board costs.

    Still… the average debt is around $27,000 and its been gradually going up year over year. Thats not trivial. But its not back breaking either.. any more than a typical new car loan.

  6. Juggler314 says:

    I started college almost 20 years ago, my dad paid 1/2 in cash, and i still left with just over 40k in loans. Granted that was a private university. My gf…who has only gone to state/city schools – but has a bachelors, masters and now is getting her JD – will have about 120k in loans – a lot of money, but far less than almost anyone with the same set of degrees…

    stats are always meaningless, except for the 50% of the time they aren’t.

  7. college -> The next big bubble

  8. Bachelor’s degrees are still cheap (on average). Graduate degrees are expensive, somewhat because many companies subsidize them. Colleges arent’ stupid – they know there are big margins to be made on graduate degrees. Law students are the biggest suckers – perhaps why many turn into blood-sucking defense lawyers afterwards.

  9. It says that debt amounts may grow over time as interest accumulates. Does that mean that interest isn’t included in those numbers, or that it is included but they aren’t doing anything to calculate what the total amount paid from here on out including interest?

    I think a lot of times when we read articles about student loan debt they mention averages and typical experiences almost as a sidebar while pushing the extreme cases to the forefront. They’re also generally only interviewing people who still haven’t paid the money back X number of years later. Since this seems to include all college graduates, it includes those with and without loans and those who took loans out a long time ago and have already paid them back. I think we’ll see the numbers rise as tuition rises and more people take out student loans (and as more provisions allow borrowers to extend their payment schedules), but I’m not surprised at the numbers as they stand right now.

  10. Very interesting. I guess I pictured the numbers being a lot higher as well. The way news media makes it sound, it does seem a lot worse.

  11. Has anyone ever noticed when the government gets into loaning money for a certain thing the costs almost always goes way up and outstrips inflation?

  12. I remember when I graduated, my wife (fiancé at the time) thought that I had a ton of student loan debt. I remember her actually being nervous about it. She owed about 50% less than me. However, I recall thinking at the time that it wasn’t really the absolute debt that mattered, it was really more a ratio of what I owed and what I would be making per year. Even though she owed 50% less her ratio was substantially worse than mine. Obviously money is not everything, but if one is concerned about debt and ROI of an education, I would focus more on the ratio of accumulated education debt and expected income.

    Once I finished paying off my debt, I paid hers off too. I love her after all! 😉

  13. Juggler314 says:

    @scott and @xmasy – there are cheap law schools too – my gf goes to CUNY law in NYC – only 5k/semester, including books. And it’s considered one of the best for social policy.

  14. Interestingly, my bachelors degree cost about $10,000. There are several inexpensive colleges (that are pretty reputable) close to home and I have kept a sharp eye on college costs. I know how much to be saving for my kids for several options (full financial data about costs of college, books, dorms, etc. are posted on each college’s website – I learned that tip a while ago. I even looked back 1999 to see if the information was in line with what I was paying then, and I believe the data is very good). Frankly, if the same degree will cost $20,000 for my kids, that is little more than inflation – and seems to be the case. I share because I am well aware of the cost of college, and most people think I am completely out of my mind. The media is so focused on the hype of how expensive college is. I have no doubt it can be very expensive and people often don’t know what they are getting into. Education, awareness, and preparation are all very good thing. Unfounded fear and mis-education is an unfortunate side effect.

    That said, most of my high school friends got “english degrees” at bigger universities. I am not 100% sure how their families paid for it, but I have the feeling large loans were not taken for these educations. Money was borrowed when that didn’t work out and they decided to get more useful degrees. I saw that scenario play out over and over. They actually went to more modest Grad schools, but the parental coffers had run dry by that point and they certainly weren’t making any money. This could be another factor on more Grad school debt. (Even people I know who got more practical degrees were more on their own for Grad School – but those were more often paid for in cash by employer).

  15. Considering that Federal student loan limits are $31K for dependent students and $57,500K for independent students, the statistics seem to make sense. http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp

  16. I had a daughter graduate from college (bachelors) two years ago. She went to schools where tuition was 2K/semester. I paid most of her tuition, and she covered most of her housing and living expenses. She also had a very modest scholarship. She graduated debt free. I am not rich, and resent the assertion that Jennifer made above
    First of all, many, many students have no debt whatsoever because their parents pay for college. (Only 30% of people get college degrees, and they’re obviously the richer 30%.)

    Many parents make great sacrifices to see that their children get an education. I suspect the reason that children of successful people are more likely to be successful and educated also has as much to do with the value system and work ethic that those parents pass on to their children as it has to do with the resources at hand.

  17. Penny commented : “It says that debt amounts may grow over time as interest accumulates. Does that mean that interest isn’t included in those numbers, or that it is included but they aren’t doing anything to calculate what the total amount paid from here on out including interest?”

    The numbers they cite are just the principal balance owed. When they say the debt may increase due to interest they mean that the balance could go up due to deferred interest being added to principal. If you don’t pay your loans the unpaid interest gets added to the debt. Loans in deferal or default can grow in size due to unpaid interest.

    Interest is not included in debt figures in general. Yes over the years the actual amount paid will be higher when you add the interest paid.

  18. The linked article leaves out a few key items that makes me think that student loan debt #’s are larger than presented here. Missing are:

    —Loans can be student loans or “plus loans or equiv”, the latter of which the parents are responsible for. Is that counted?

    —Timeframe: student loan debt “six years after they started undergrad studies”…does that mean some has been paid back if they’re 2 years into full employment now? And what time horizon was looked at?…did they start compiling the data this year and go back to 20 years worth of college students? — in which case the #’s aren’t realistic because we’re looking at “old student loan info” too when tuition was much, much cheaper.

  19. Looking through the data source it looks like the cohort of college students polled include those who started school in 2003, which is obviously 8 years ago when financial times were better than they are today.

    I would assume that those starting school in 2010 or 11 would have higher debt loads as cost of schooling is higher and *probably* fewer parents are able to help pay for their kid’s college expenses.

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