One-Fifth of Households Slammed by Student Debt
A record number of American households carry student loan debt, while the average outstanding loan balance is the highest it's ever been, according to a new report from the Pew Research Center. The Pew analysis found that about one out of five (19 percent) households, or around 22.3 million, were burdened with student debt in 2010. That figure is more than double the 9 percent it was in 1989, and it marks a big jump from 15 percent in 2007.
Here are some of the more alarming figures from the report:
- The average outstanding student loan balance rose from $23,349 in 2007 to $26,682 in 2010.
- Most debtor households had less than $50,000 in outstanding student debt in 2010. But the share of households owing high amounts has climbed: In 2007, 10 percent of debtors owed more than $54,238. By 2010, 10 percent of them owed more than $61,894 (adjusted for inflation).
- Among households headed by someone younger than 35 years old, a record 40 percent owed student debt in 2010.
Student loan debt hit $904 billion in the first quarter of 2012, a $30 billion increase from the previous quarter, and up from $241 billion a decade ago, according to the Federal Reserve Bank of New York's quarterly report on household debt. The Consumer Financial Protection Bureau puts total student loan debt above $1 trillion. (Read more: America's Student Loan Crisis: It's Not the Debt, It's the Lack of Jobs.)
One added twist in this report shows the groups impacted most by the debt increases are at opposite ends of the income spectrum — the poorest and wealthiest households. In 2010, the lowest fifth of households by income owed 13 percent of all outstanding student debt, up from 11 percent in 2007. For the richest fifth, that figure rose from 28 percent to 31 percent over the same period.
Another striking item from the report is that student debt is rising while households are reducing their other debts. Student debt rose from 3 percent of outstanding total debt owed by households in 2007 to 5percent of all debts in 2010. Meanwhile, average household debt fell from $105,297 in 2007 to $100,720 in 2010, a 4.3 percent drop.
Driving the rise in outstanding student debt, says Richard Fry, a senior economist at Pew who authored the report, are several factors, the first of which is the sharp growth in college enrollment during the Great Recession.
- There were 18.2 million students enrolled in college in the fall of 2007, and 21 million in 2010 — a 15 percent increase, the report says.
- College students are increasingly borrowing to finance their education, and borrowing in greater amounts. In 2009-10, 51.1 percent of full-time, first-time undergraduate students had a student loan, an increase from the 43.5 percent of such students in 2006-07.
- The average public, four-year college graduate had accumulated $22,000 (in 2010 dollars) in debt upon receiving a bachelor's degree in 2009-10, up from $20,500 (in 2010 dollars) in 2006-07.