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Financial Planning > College Planning > Student Loan Debt

More Middle- to High-Income College Students Graduate With Debt

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The size of a typical student’s loan debt burden has doubled over the last 20 years, and women are borrowing more than men, according to research from the Pew Research Center, based on the National Postsecondary Student Aid Study (NPSAS).

In 2012, 50% of students whose parents earned a combined income of $125,700 or more graduated with student loans — up from 24% 20 years ago. There was also an increase in debt for students whose parents were highly educated.

In the academic year 2011-’12, 61% of students whose parents had graduated from college graduated with some sort of debt, the reported stated, up 50% from 20 years ago.

Graduates from the highest income homes saw a faster rate of increase in borrowing, the reported stated. However students from “low-income families continue to be more likely to graduate with student loans,” said Richard Fry, senior economist at Pew Research Center, in his report.

One reason is more students are choosing to attend for-profit schools. In 2012 a seperate report posted online by Sen. Tom Harkin, D-Iowa, chairman of the health, education, labor and pensions committee, found that for-profit institutions cost more and a majority of their students leave without a degree. 

“In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation,” said Harkin in his report.

Fry wrote that young debtors with student loan debt were less creditworthy than those without student debt. “The decline in creditworthiness is thought to perhaps be tied to the expansion of postsecondary education and the participation of students from lower income backgrounds,” Fry said.   

Another reason is that financial aid has not kept up with the incline of college costs. “Many state legislatures have curtailed the aid they’ve given to higher education,” Fry said. “If you can’t get it from the taxpayers, you have to get it from the students.”

Student loan debts weigh heavily on a student after she has graduated. Fry’s analysis of the data suggest that further investigation on who is borrowing and why could be beneficial for debt forgiveness proposals.

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