The Burden Of Debt

Growth in Student Loan Debt Has Slowed — but Some Trouble Spots Remain

There are red flags among a variety of demographics

A new Issue Brief from the Employee Benefit Research Institute (EBRI), written by Craig Copeland, explores debt’s far-reaching financial implications. Excerpts are presented below. Read the full report here.

A new EBRI study finds the percentage of American families with student loan debt increased from 10.5 percent in 1992 to 22.3 percent in 2016 — a steep increase. However, since then, there has been a leveling off, with the percentage having student loan debt declining to 21.4 percent in 2019. The study also found the distribution of the families having student loan debt across key characteristics vs. those who don’t varied widely.

“Student Loan Debt: Who Has It and How Much?” examines the incidence of student loan debt among American families including trends going back to 1992 based on data from the Federal Reserve’s Survey of Consumer Finances (SCF). It also looks at the amount of outstanding student loan debt and required payments across many demographic characteristics. The Issue Brief also explores the amount of other assets held, particularly defined contribution plan assets, are compared between those with and without student loans.

Student Debt Is ‘Overwhelming’

The study also found that in aggregate, student loan debt is overwhelmingly (87.7 percent of the value of the debt) held by families with incomes in the top half, net worth in the top half, or have heads with a college degree or higher. Restricting it to just the families with incomes or net worth in the top half, 67.9 percent of student loan debt was held by these families. In other words, most of those holding student loan debt do tend to have a higher ability or a higher potential ability to pay for these expenses.

However, there are red flags among a variety of demographics. Notably, those who obtain student loans but do not finish their college degree have a lower a likelihood of DC plan ownership, and when they do have a DC plan balance, it is smaller than for those who do finish college with a student loan. “This is a particularly troubling finding,” said Craig Copeland. “These families end up with the costs, but not the benefits of attending college.”

A pressing issue for those seeking a college education is the high cost, which commonly results in American families amassing student loan debt. The Employee Benefit Research Institute (EBRI) is exploring the far-reaching financial implications of student loan debt for families who have it.

This Issue Brief examines the incidence of student loan debt among American families, including trends going back to 1992, based on data from the Federal Reserve’s Survey of Consumer Finances (SCF). It also looks at the amount of outstanding student loan debt and required payments across many demographic characteristics. Lastly, the amount of other assets held, particularly defined contribution plan assets, is compared between those with and without student loans.

Key findings are:

  • The percentage of American families with student loan debt increased from 10.5 percent in 1992 to 21.4 percent in 2019 — a leveling off of the steep increase through 2016, where the percentage peaked at 22.3 percent.
  • The distribution of the families who have student loan debt across key characteristics vs. those who don’t varied widely:
A pressing issue for those seeking a college education is the high cost, which commonly results in American families amassing student loan debt...

Those with student loan debt were younger: In 2019, 66.7 percent of the families having student loan debt had heads younger than age 45, and 40.5 percent were families with heads younger than age 35. In contrast, just 29.6 percent of those without debt had heads younger than age 45.

Those with student loan debt had more education: Of families with this debt, 83.7 percent had heads with at least some college education in 2019, compared with 59.7 percent of those without student loan debt.

Those with student loan debt had higher incomes: Over 55 percent (57.5 percent) of families with student loan debt had incomes in the top 50 percent of all families in 2019, compared with 47.1 percent for those without student loans.

While the families with the youngest heads had the highest percentage with student loan debt, families with older heads had larger increases in the percentage with student loan debt. The percentage of families with heads under age 35 who had student loan debt increased 70 percent since 1992 (24.4 percent in 1992 to 41.4 percent in 2019). By comparison, the percentage of families with heads ages 45–54 who had student loan debt grew 309 percent, and the percentage of families with heads ages 55–64 who had student loan debt grew 321 percent.

African American Families 50% More Likely To Hold Student Debt

Further, families with a Black/African American head were 50 percent more likely than families with white, non-Hispanic heads to hold student loan debt (20.0 percent and 30.2 percent, respectively).

The median outstanding student loan balance increased from $5,704 in 1992 to $22,000 in 2019 (a 286 percent increase). The average student loan balance had a similar increase from 1992 to 2019 ($12,498 to $40,550 — a 224 percent growth).

Families with heads younger than age 35 with at least a college degree appeared to be particularly struggling with student loan debt. This group had higher required monthly loan payments with a median at $300 and a median percentage of family income of 4.9 percent.

A particularly troubling finding is that those who obtained student loans but did not finish their college degree had a lower likelihood of defined contribution (DC) plan ownership, and when they did have a DC plan balance, it was smaller than for those who did finish college with a student loan. In short, these families end up with the costs but not the benefits of attending college.

Nevertheless, student loan debt can be considered an investment that helps individuals obtain a better job with higher earnings that cannot be reached without a college degree. Thus, in aggregate, student loan debt is overwhelmingly held by families with incomes in the top half, with a net worth in the top half, or who have heads with a college degree or higher. Consequently, those holding student loan debt either have a higher ability or have a higher potential ability to pay for expenses than American families having lower incomes or net worths or having heads with lower educational attainment.