Thursday, January 7, 2016

Mark as favorite Debt and no degree - Kevin J. James, AEI

In his analysis, Kantrowitz looks at graduates’ debt balances compared to their initial incomes after school. In each case, he considers a debt excessive if a borrower’s monthly payments, for a 10-year repayment term, would consume more than 10 percent of his income. Classifying excessive debt in this way makes some sense: Graduates with high balances but also high incomes may do just fine, so it’s important to look at more than just a borrower’s loan balance. Using this approach, he finds that the fraction of students graduating with excessive debt has grown steadily for several decades, starting at 6.5 percent in 1985 and climbing to 14.4 percent in 2007. These findings also track with the general direction of student borrowing overall: As Kantrowitz reports, college graduates who borrowed took an average of around $35K in 2014, up from roughly $20K in 2004 and $11K in 1994.

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