Examining the Debt Burden of Bachelor’s Degree Recipients

By Jael Greene

The National Center for Education Statistics (NCES) recently released a brief titled The Debt Burden of Bachelor’s Degree Recipients which examines a student’s accumulated postsecondary debt four years after completing his/her bachelor’s degree in 2007-08. The student debt data includes debt accrued through federal student loan programs and private student loans.

Key findings include:

  • 72 percent of the 2007-08 bachelor’s degree recipients had borrowed to fund their postsecondary education. Four years after receiving their bachelor’s degrees, 63 percent of the total cohort still owed student debt.
  • Debt levels varied based on whether or not students enrolled in further postsecondary education after receiving their bachelor’s degree.
    • For students who did not enroll in further postsecondary education (56.5 percent of the cohort studied), 66 percent had borrowed to fund their undergraduate education, with an average debt of $29,600.
    • For students who did enroll in further postsecondary education (43.5 percent of the cohort studied), 71 percent had borrowed to fund their undergraduate education, with an average debt of $61,300.
  • Repayment status also varied. Among those who did not enroll in further postsecondary education, 69 percent were in repayment, 17 percent had paid off their loans, 9 percent were not paying but still owed (in deferment, forbearance or in the grace period before payments began for instance), and 5 percent had defaulted.
  • The average debt burden, defined as the monthly loan payment as a percentage of monthly salary, was 9 percent for all borrowers in the cohort.
  • The average debt burden for students in repayment was 11.9 percent.
  • Debt burden changed depending on whether a student had enrolled in further postsecondary education.
    • Students in repayment without enrollment in further education had a debt burden ratio of 10.4 percent. Students in repayment with enrollment in further education had a debt burden ratio of 14.1 percent.
    • Analysts studying the issue of debt burden have agreed that 8 to 10 percent is a manageable percentage of income that a borrower can be expected to dedicate to loan repayment. This means a ratio higher than 12 percent of total income is considered burdensome.