T R E N D S I N H I G H E R E D U C A T I O N S E R I E S
Who Borrows Most?
Bachelor’s Degree Recipients with
High Levels of Student Debt
By Sandy Baum & Patricia Steele
Many discussions of student loan debt are clouded by a failure to distinguish between typical students and the growing minority who
borrow amounts and types of loans that are likely to cause them repayment difficulties. This policy brief focuses on the 17% of 2007-08
bachelor’s degree recipients who graduated with more than $30,5001 in education debt.
High debt levels are not necessarily an indicator of repayment problems. Many students with relatively low debt struggle with weak
earnings, and we know that failure to complete a degree or certificate program is the most consistent predictor of student loan default.2
Some individuals with high debt levels, particularly those with advanced degrees, have high enough earnings to support that debt, but
others do face severe hardships. The study of these populations deserves future study.
Our examination of the characteristics of the undergraduate students whose debt levels are largest highlights one category of borrowers
who may be at risk. The data in this report describe the prevalence of high debt levels among bachelor’s degree recipients by sector,
race/ethnicity, dependency status and income. As Figure 1 shows, high debt levels are most common in the for-profit sector.
There is an urgent need for strengthening postsecondary financing policies and for better guidance and improved financial literacy for
students before they borrow to finance their postsecondary education. The new federal income-based repayment option promises to
significantly reduce hardship for many students who have previously struggled to meet their repayment responsibilities. This program
does not, however, apply to the nonfederal loans taken by many students with high debt levels.
1. Total loan debt of $30,500 or more represents undergraduate bachelor’s degree recipients