Nearly half of all undergraduates take out student loans over the course of their enrollment to help them pay for their postsecondary education. This includes nearly two-thirds of students who attend private nonprofit 4-year colleges and about 90 percent of students enrolled in for-profit institutions. Between 2000 and 2011, total borrowing per undergraduate student increased by 56 percent.
Unemployed, underemployed or low income
While student loans improve access to postsecondary education, repaying them has become increasingly difficult for students who are unemployed, underemployed, or who earn a limited income. These difficult circumstances are more common among students who do not complete a degree than among those who do. “Several studies and government reports have highlighted the problems of heavy borrowing, high default rates, and unmanageable debt among students who graduate from postsecondary education with a degree or credential”, the report states.
The Federal Student Loan Debt Burden of Non-completers, a Statistics in Brief, focuses on the federal student debt burden of students who do not complete a study within 6 years. The study compares the cumulative debt from Stafford and Perkins loan programs of students who did not complete a degree within 6 years with that of their counterparts who did complete.
Debt higher than annual income
The study shows that in 2009 the percentage of non-completers after 6 years ranged from 19 percent of students in private nonprofit 4-year institutions to 46 percent in public 2-year colleges or for-profit institutions. The number of students that did not complete a study at commercial institutes has risen from 35 percent in 2001 to 46 percent in 2009, an increase that was not observed in other fields.
The percentage of students that uses federal student loan programs ranges from25 percent of students in public 2-year colleges to 86 percent in commercial institutions. In four year programs around 60 percent of the students use these federal programs. This amount varies between $80 per credit at public universities to $350 per credit at private institutes.
The median cumulative federal student debt for all non-completers amounted to 35 percent of their annual income. The debt burden is highest among con-completers from public universities, where the median debt equals 51 percent of the borrower’s annual income. At private institutes the debt burden is slightly lower although it more than doubled from 20 percent in 2001 to 43 percent of their annual income. The group whose debt is greater than their annual income increased in the last ten years from 13 percent to 31 percent, for those who studied at private institutes.