Degrees of Debt: Student Borrowing and Loan Repayment of Bachelor’s Degree Recipients 1 Year After Graduating: 1994, 2001, and 2009

By Betsy Prueter

A recent report from the U.S. Department of Education’s National Center for Education Statistics analyzes three cohorts worth of data from the Baccalaureate and Beyond Longitudinal Study on borrowing and repayment trends of bachelor’s degree recipients within one year of graduation.

Among the report’s findings: – Students who earned a B.A. in 2007-08 were more likely to borrow money than students in both previous cohorts (1992-93 and 1999-00). This was true across all types of institutions (public, private nonprofit, and for-profit) – On average, 66% of students who graduated in 2008 borrowed money, compared to 64% of students graduating in 2000 and 49% of students graduating in 1993. – Students who graduated in 2008 had greater debt than students in both previous cohorts. – In inflation-adjusted dollars, the average debt for a 2008 graduate was $24,700 while for 2000 graduates the average debt was $22,400 and for a 1993 graduate, the average debt was $15,000. – For Pell recipients in 2008, average debt upon graduation was $26,000 compared to an average debt of $15,700 of a 1993 graduate receiving a Pell grant. – At both private and public institutions, dependent students from the lower half of the income distribution (defined as below $90,000 in 2008, $64,000 in 2000, and $55,000 in 1993) were more likely to borrow than students from the upper half of the income distribution. – In 2008, 65% of lower income students borrowed at public institutions, compared to 48% of upper income students. At private institutions, 80% of lower income students took out loans, compared to 57% of upper income students. 60% of 2008 graduates were repaying their loans within one year of graduation compared to 66% of 2000 graduates and 65% of 1993 graduates. – The percentage of graduates not in repayment but who still owed on their loans (due to deferments, forbearance, or default) rose from 18% for 1993 graduates to 25% for 2000 graduates to 29% for 2008 graduates. – Nearly 75% of students who worked at least 35 hours/week while attending college borrowed money in the 2008 cohort, compared to 56% of those who did not work but also borrowed. This was in increase from the previous cohorts for working and nonworking students. – 31% of 2008 graduates faced high monthly loan payments (greater than 12% of their monthly income) compared to 22% of 2000 graduates and 18% of 1993 graduates.