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Third of Student Debt Owned by Only 6% of Borrowers

Students protest debt borrowed for college and university.
Students protest debt borrowed for college and university.

One-third of outstanding U.S. student loan debt is owned by only 6% of all student loan borrowers, according to a new report.

The public policy nonprofit Brookings Institution released a report this week clarifying where all of that $1.5 trillion student debt comes and goes.

"A very small fraction of all student loan borrowers have very large loans. Six percent of borrowers owe more than $100,000 in debt, with 2% owing more than $200,000," the report by Brookings' Kadija Yilla and David Wessel found. "This 6% owes one-third of the outstanding $1.5 trillion of debt.

"At the other extreme, 18% of borrowers owe less than $5,000 in student loan debt. They collectively owe 1% of the debt outstanding," the report stated.

About one-quarter of those with student loans borrowed for graduate school, Brookings said, but that one-quarter owns about half of all outstanding student loan debt.

"While only a small share of households with student debt have a graduate degree, loans associated with graduate degrees account for 50% of the total outstanding student loan debt," the report said. Households with student debt headed by someone without a bachelor’s degree account for only one-quarter of total outstanding debt.

And those who owe the most are not the ones defaulting on debt, the Brookings report said.

Brookings said borrowers with graduate degrees who own half of all student debt are the least likely to default. Who has higher default rates? Those who attend for-profit universities, like DeVry and the University of Phoenix.

In February 2018, U.S. President Donald Trump was required to pay $25 million to settle class-action lawsuits accusing Trump University of fraud after failing to deliver on promises to teach students how to succeed in the real estate sector.

"Forty percent of borrowers from for-profit, two-year programs default on their loans within five years," the report said. Just under one-third of borrowers who attended for-profit four-year programs "defaulted in this same timeframe."

Among students who borrowed to attend public community colleges, about 25% default within five years of entering repayment.

Defaults are much less frequent among those who borrowed to go to public or private nonprofit four-year schools.

Student debt is not all about tuition. In some cases, room and board, books, transportation and other living expenses cost well above tuition.

"Many students borrow to not only cover their tuition and fees but also to get cash to finance the cost of living while they are in school," Brookings reported.

Some public schools offer students "tuition free" financial aid. But that doesn't include the dorm or rental housing, or food. For students at public universities and colleges who pay no tuition, 22% borrow $30,000 or more. The average student borrows $24,000, Brookings said, based on an Urban Institute analysis conducted using the National Postsecondary Student Aid Study.

And what about all those young college students receiving bachelor's degrees from four-year colleges and universities? They graduate with little to no debt, Brookings said.

"Thirty percent of all bachelor’s degree recipients graduate with no debt," Brookings reports. "Another 23% graduate with less than $20,000 in loans."

Fewer than 20% of all borrowers owed more than $40,000. Only 12% of those who attended four-year public colleges owed more than $40,000.

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Universities move away from DEI initiatives

FILE - The sign above the door to the Office of Diversity, Equity, Inclusion and Belonging inside the main administration building on the main University of Kansas campus is seen on April 12, 2024, in Lawrence, Kansas.
FILE - The sign above the door to the Office of Diversity, Equity, Inclusion and Belonging inside the main administration building on the main University of Kansas campus is seen on April 12, 2024, in Lawrence, Kansas.

Diversity, equity and inclusion initiatives have fallen out of favor in higher education recruiting and hiring in recent years, but even more colleges and universities are moving away from the programs now, Thea Felicity reports in University Herald.

In addition to political opposition to the programs, there are concerns that DEI initiatives hinder free speech, affect ideological balances and discourage academic freedom. (December 2024)

‘College Deserts’ leave many communities without higher education options 

FILE - The Cuyahoga Community College campus is shown, May 28, 2019, in Cleveland, OHIO.
FILE - The Cuyahoga Community College campus is shown, May 28, 2019, in Cleveland, OHIO.

“College Deserts” – areas where high schools are located more than 30 miles away from the nearest community college – leave large groups of people unable to pursue higher education because of transportation problems, Lexi Lonas Cochran writes in The Hill.

Most college deserts are in the Southern U.S., with a recent study in Texas showing that long commuting distances discourage many potential students from attending college. (December 2024)

Analysts say rate of college closures likely to increase 

FILE - The Manor House at Goddard College in Plainfield, Vt., is seen on Wednesday, April 10, 2024. The college's Board of Trustees announced Tuesday, April 9, that the school is closing at the end of the semester after years of declining enrollment and financial struggles.
FILE - The Manor House at Goddard College in Plainfield, Vt., is seen on Wednesday, April 10, 2024. The college's Board of Trustees announced Tuesday, April 9, that the school is closing at the end of the semester after years of declining enrollment and financial struggles.

If current trends continue, the rate of college closures is expected to increase, according to a new study reported in Forbes.

Closures are more likely to affect private institutions, and while the number of closures might seem small on a national level, it could cause serious problems for the smaller and mid-sized communities where those colleges are located. (December 2024)

Judge upholds racial considerations in US Naval Academy admissions 

FILE - U.S. Naval Academy midshipmen participate in a formal parade on the school's campus in 2010. (U.S. Navy photo)
FILE - U.S. Naval Academy midshipmen participate in a formal parade on the school's campus in 2010. (U.S. Navy photo)

Although the U.S. Supreme Court last year decided that civilian colleges and universities could not consider race or ethnicity in admissions, a judge ruled that the U.S. Naval Academy had established a national security interest in a diverse officer corps.

That means the academy – and other military service academies – can continue to consider race. A similar policy at the U.S. Military Academy at West Point has also been challenged, but that case has not yet gone to trial, according to a report in Navy Times. (December 2024)

Harvard recommends gap year as a strategic move 

FILE - In this July 16, 2019, file photo people walk past an entrance to Widener Library, behind, on the campus of Harvard University, in Cambridge, Mass.
FILE - In this July 16, 2019, file photo people walk past an entrance to Widener Library, behind, on the campus of Harvard University, in Cambridge, Mass.

While some students and parents see the gap year as a waste of time, others see the break in academic studies as valuable for developing maturity, earning money or focusing goals.

MSN.com explains some of the reasons why Harvard – and other prestigious schools in the United States – are recommending that students take a gap year. (December 2024)

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