The Deepest in Debt

There's a subtle debate unfolding among financial aid experts and advocates for students about just how much student loan debt is too much. While some recent studies have declared a crisis in student borrowing, citing the growing number of student borrowers and the amounts they owe, the College Board, in a report released Monday, seeks to reframe the discussion by focusing on those deepest in debt.

It's not that the authors of the College Board report, Sandy Baum and Patricia Steele, don't think there's a major problem with student loan debt; they do, and their report, "Who Borrows Most? Bachelor's Degree Recipients With High Levels of Student Debt," offers plenty of troubling data. But in an era where grant money is usually insufficient to meet ever-rising tuition costs, it's not borrowing per se that's the problem, they argue; it's the amount and types of loans that are likeliest to land borrowers in significant financial trouble.

That's why the report focuses not only on the two-thirds of all graduates who accumulate any debt, but on the quartile of those students who borrow the most -- at least $30,500 over the course of their undergraduate careers, according to the board's report. Having large debt alone doesn't mean that borrowers will end up in financial trouble, or that borrowers with much less debt won't default on loans, especially if they fail to graduate and/or get a job (non-graduates, who are not examined in the College Board report, are more likely to default than are degree holders). But students with high levels of debt -- particularly when that borrowing includes more expensive non-federal loans -- are especially vulnerable, the researchers say.

"You could argue that some students with $5,000 of debt are in trouble if they can't pay their rent," Steele said in an interview. "But we really wanted to answer the question, 'Who the heck are these people that are in the top category of borrowing?' to try to shift the policy conversation to those who are really susceptible to financial trouble."

Digging into data from the National Postsecondary Student Aid Study, Baum and Steele zero in on the 17 percent of all bachelor's degree recipients in 2007-8 who left college with at least $30,500 in debt (that's the top 25 percent of the two-thirds of graduates who borrow to pay for their educations). As seen in the table below, the average loan debt of more than one in six bachelor's degree recipients was an eye-popping $45,700, and more than a third of that figure came in the form of more-expensive and riskier private, non-federal loans.

Looking only at the average levels of debt, as the previous table does, might lead one to be most worried about white and Latino students and borrowers at private nonprofit colleges, since they show the highest debt levels.

But other statistics in the College Board's report suggest that the biggest areas of concern lie elsewhere. A full 53 percent of bachelor's degree recipients at for-profit institutions fall into the "high debt" range of at least $30,500 in cumulative loan burden, compared to 24 percent of nonprofit four-year colleges and 12 percent of public four-year graduates. Just 4 percent of for-profit bachelor's graduates had no debt at all, compared to 28 percent of private four-year college graduates and 38 percent of public four-year students.

And while Steele warns against paying too much attention to breakdowns by race, because some of the sample sizes are small, data in the report do suggest that black graduates are likelier than students of other races to accumulate high debt totals (27 percent vs. 16 percent for white students, 14 percent for Hispanic/Latino students, and 9 percent for Asian students).