Student Loans: The Facts

Story image for todays news on loans from New York Times

Lee Siegel, an author, sparked a heated discussion about student debt after writing about his decision to default deliberately on his loans. He did so, he wrote in a New York Times Op-Ed article, so that he could pursue his career as a writer without the financial burden of paying his loans, and he called on other borrowers to join him in order to press politicians to address rising college costs.

One obvious question is how typical Mr. Siegel is of today’s indebted students. Let’s look at some numbers:

He attended Columbia University, while the typical student attends a public, nonselective college. Seventy percent of undergraduates attend a public school, with more than a third of those enrolled in a community college.

Mr. Siegel earned a bachelor’s and two master’s degrees from Columbia, while nearly half of today’s college entrants leave with no degree at all.

While we don’t know how much Mr. Siegel borrowed, borrowing is highest among the minority of college students who go on for graduate study, as he did. Among those who earn a master’s degree, 47 percent borrow more than $40,000, with 20 percent borrowing more than $80,000. The numbers are far lower for undergraduates, with just 7 percent borrowing more than $30,000 and 2 percent more than $50,000. Sixty-eight percent borrow $10,000 or less.

There is one last way that Mr. Siegel is unusual: He defaulted. Only 2 percent of those who get a graduate degree default on their loans. Why so low? Earnings rise with education. Graduate students borrow a lot more than undergraduates, but the earnings that go with those advanced degrees make it a lot easier to meet the monthly payments.


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