Degrees of debt

This week, President Donald Trump signed an executive order to streamline a law that forgives injured veterans’ school debt. As another class of students heads to college, we look at the increasing amount of loans that are taken out to pay for higher education.

According to the Federal Reserve Bank in 2018, the average monthly payment of students loans was $200-$300.

More than 44 million Americans owed about $1.5 trillion on student loans at the end of March 2019, more than twice what they owed a decade earlier. The increase has come as historically high shares of kids go to college and the cost of higher education increases.

In 1985, annual tuition and fees for University of California schools were about $1,295 for residents, which is about $3,087 in 2019 dollars. In 2011, the average tuition and fees for UC students were $14,460.

Proportion of debt

Outside of home mortgages, household debt was dominated by auto loans and credit cards until student debt began its climb. Student debt took the lead around 2010 and continues to spiral upward.

By comparison, mortgage debt before the housing crash in 2008 was about $9 trillion. It dipped below $8 trillion in 2013 and has risen to $9.41 trillion in 2019.

Average debt

The average debt of graduating seniors at four-year colleges who borrowed has more than doubled since 1996.

According to the Federal Reserve Bank of New York in 2016, 65% of student debtholders owed less than $25,000, while only about 5% owed more than $100,000. Yet the big-balance borrowers accounted for nearly 30% of the total balances outstanding.

Struggling to pay

The percentage of borrowers seriously delinquent (90-plus days), by loan type.

11.5% of student loans are 90 days or more delinquent or are in default.

Students graduating with debt

According to a 2018 report by the Institute for College Access & Success, statewide average debt levels for the class of 2017 ranged from $18,850 (Utah) to $38,500 (Connecticut). In 42 states, 50% or more of students had debt. West Virginia and New Hampshire had the highest proportion, 74%.

States with most degrees

The map shows the percentage of Americans 25 or older with a bachelor’s degree or higher. According to U.S. Census data from 2013-2017, Massachusetts, with 42.1%, is the most educated state.

Is it worth it?

According to a 2018 survey by the Pew Research Center, about a third of student loan holders think the lifetime financial costs of their bachelor’s degree outweigh the benefits.

Percentage of those ages 25-39 with at least a bachelor’s degree saying that, thinkingof the lifetime financial benefits and costs of their bachelor’s degree, the …

Sources: New York Fed Consumer Credit Panel, The Institute for College Access & Success, Pew Research Center, New York Federal Reserve, The Daily Californian at UC Berkeley, U.S. Census


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