10 Shocking Truths You Need to Know About Student Loan Debt

The Southwest not only has the best barbecue, the region also has the lowest average student debt. The winning southwestern state is Utah, with an average of only $17,227. Despite this statistic, 45 percent of college students in Utah graduate with some debt.

Compare this to New Hampshire’s $32,440 average. In New Hampshire, 75 percent of students graduate with debt.  New Hampshire is home to the renowned Dartmouth College, where 50 percent of students leave with loans to pay off.

Nevada comes in at a close second to Utah, with a $19,954 average debt and 44 percent of students graduating with loans.

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Ostensibly colleges like it when their students perform well. The government likes it, too. In fact, it reward colleges whose students don’t default on their debt. And they punish them when they do. Under a new program, if a college has a 30 percent default rate for three or more years they could lose their ability to apply for federal financial aid. So it’s in a college’s best interest to have their students pay off their debt on time. 

To do this, some for-profit colleges have used underhanded tactics to keep their federal funding. The for-profits were called out in a report by the Senate Committee on Health, Education, Labor and Pensions for encouraging students to defer early loan payments. This helps the schools keep their default rates low even though it’s not in the best interest of the student.

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Education is thought of as the great equalizer. But studies show that in terms of debt, it may not be all that equal. Compared to other groups, African American students graduate with the most debt. According to the Center for American Progress, 81 percent of African American students graduate from college with student loan debt.  In contrast, 67 percent of Latino and 64 percent of white students graduate with debt. 

When minority students leave school, the inequality continues. On average, African Americans and Latinos with master’s degrees earn less than their white peers with bachelor’s degrees.

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Approximately one in ten students have defaulted on their student loans. 

According to a recent New York Federal Reserve report, 11 percent of borrowers are now more than 90 days delinquent on their loans, which is higher than “serious delinquency” on credit cards.

The report also makes it clear that this figure is understated. It doesn’t account for loans that aren’t in the repayment cycle (such as those in deferment or grace periods).  This translates to about 5.9 million people who are behind on their debt payments.

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Student loan debt is now at $956 billion. This is an increase of $42 billion since the last financial quarter. That new $42 billion is made up of $19 billion in ‘old’ debt (debt that was defaulted and carried over to this quarter) and $23 billion in ‘new’ debt. The majority, $864 billion, is from federal student loans and the remainder from private loans. The exorbitant borrowing for education shows no sign of slowing down, either.     

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