NPR: These are the people struggling the most to pay back student loans

NPR, July 9, 2019: These are the people struggling the most to pay back student loans

“The large debts we hear about are often taken out by graduate students — people who get an MBA or who get an M.D. or get a law degree or get a master’s,” says Susan Dynarski, an economist at the University of Michigan.

Those aren’t the folks to worry about, Dynarski says. Neither are borrowers who got their bachelor’s degree — who on average have about $30,000 in loans after graduation. For many of those borrowers, the loans did their job: They allowed students to go to college, get their degrees, land a better job and, ultimately, pay back those loans.

The people who are really struggling, experts say, are the roughly 1 million borrowers who default on their student loans each year — about 7 million borrowers in total at the end of 2018, according to the latest numbers from the U.S. Education Department.

The default rate among borrowers who didn’t complete their degree is three times as high as the rate for borrowers who did complete. When these students stop taking classes, they don’t get the wage bump that graduates get that would otherwise help them pay back their loans.

There are other inequities in the distribution of loans and defaults, too.

Half of African American borrowers who took out loans for the 2003-2004 school year had defaulted after 12 years, according to federal data. Because black students have less generational wealth on average, experts say, they’re more likely to borrow in the first place. They’re also more likely to attend for-profit schools, and they often earn less money after college. Though for-profit institutions only serve about 10% of students, these students are more likely to default. Students who receive a Pell Grant — that’s the program that provides free money for low-income students — are also more likely to default.

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