Student Debt Facts: The Average College Senior Owes $29,000

On Sunday, Robert F. Smith, a billionaire investor, shocked and delighted the 396 graduates of Morehouse College when he pledged to repay their student loans. The gift, which was praised for its potential to transform the life of each recipient, is also focusing attention on a systemic problem that one donor’s generosity cannot solve: the large student debt burdens shouldered by tens of millions of Americans.

Here are some answers to your questions about student debt, and a look at how the issue is increasingly a topic of debate in national politics.

About two-thirds of seniors at four-year colleges hold student loan debt — an average of $28,650 per person in 2017, according to an analysis of federal data from the Institute for College Access and Success, a nonprofit that advocates affordable higher education.

Student debt has risen significantly. The average debt burden for a senior at a four-year college was $12,750 in 1996, adjusted for inflation. At that time, only 58 percent of graduates held student debt.

The vast majority of the loans come from the federal government. Private loans, which account for 14 percent of the market, are riskier and more expensive for borrowers.

Currently, between 5 and 7.6 percent.

Yes, and that makes the Morehouse gift especially significant. Recent black graduates of four-year colleges owe, on average, $7,400 more than their white peers, according to research from the Brookings Institution. Four years after graduation, they still owe an average of $53,000, almost twice as much as whites.

Students at historically black colleges, like Morehouse, are also more likely to take out loans than other students, in part because black parents have less wealth to help pay for their children’s educations.

Not the Morehouse graduates. Some of the biggest default risk is on those who attend certificate programs at for-profit colleges — like in cosmetology or health — and to those who drop out of such programs.

About half of undergraduates who entered for-profit colleges during 2003-2004 defaulted 12 years later, compared with 12 percent at public colleges and 14 percent at private, nonprofit colleges.

In that same group of students, regardless of the type of college they attended, 11 percent of those who completed their certificate or degree defaulted, compared with 23 percent of those who dropped out.

Not always. The borrower must file a separate motion in court called an “adversary proceeding” and demonstrate that repaying the loan would cause “undue hardship.” The court makes the final determination.

Have you heard of Wayne Messam? He’s the mayor of Miramar, Fla., and he entered the Democratic presidential primary in March with a promise to wipe out every cent of the more than $1 trillion of student debt in the nation — whether the borrower is a wealthy surgeon or a working-class nursing assistant.

Among the better-known candidates, Elizabeth Warren has the furthest-reaching plan. It offers up to $50,000 of debt relief to those earning under $100,000, and would repay a percentage of that, on a sliding scale, for those earning between $100,000 and $250,000. The plan would also increase federal funding for historically black colleges. Ms. Warren would finance her plan with higher taxes on corporations and the wealthy.

A major criticism of such a plan is that it would benefit the wealthy along with the middle class and the poor. During a CNN town hall last month, Senator Amy Klobuchar of Minnesota, who is also running for president, argued that the Warren approach was unrealistic. Her plan would allow students to refinance their loans at lower interest rates.

The Trump administration has rolled back Obama-era regulations that were meant to protect student borrowers, particularly those who attended for-profit colleges. Last year, President Trump proposed a budget that would have eliminated a student loan forgiveness program for those in public service careers, but Congress did not pass the measure.

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