High Debt, Low Information: A Survey of Student Loan Borrowers

21 March 2012
By Healey C. Whitsett, on behalf of Young Invincibles

The number of people currently holding student debt is staggering: 37 million Americans and counting. These debtors are concentrated in the younger segment of the population, as more than 60 percent of the total are between the ages of 18 and 39. One of the most worrisome student borrowing trends is the increase in the number of high-debt borrowers who carry debt loads far above $25,000, the national average amongst undergraduate student borrowers. Student debt loads of $50,000, $100,000, and $200,000 are still the minority, but those high figures are becoming more common, and with unknown consequences for the individual debtors or the economy as a whole. Despite this, we know remarkably little about these high-debt borrowers. In particular, we do not know about the "loan literacy" they had or did not have when making the choice to take out such large amounts of student debt. Understanding the decision-making process of these borrowers is critical to inform policymakers as they make evidence-based considerations of potential responses.

In this report, produced on behalf of Young Invincibles, NERA Senior Analyst Healey Whitsett takes a first look at the experiences of high-debt borrowers by analyzing survey data from about 6,500 undergraduate and graduate student loan borrowers, fully 25 percent of which have outstanding loan balances at or exceeding $100,000. The population that participated in the survey therefore provides insight into the experiences of the 5 percent of borrowers in the United States with the highest debt levels. The report's analysis aims to determine the factors that high-debt borrowers did not understand when making their loan decisions, and the loan characteristics they said influenced their decision-making.