The Other One Percent: Who Has the Most Student Loan Debt?

A common feature of the Occupy protests is a concern with student loans. But how much debt do most college graduates actually hold?

According to an article by economist Judith Scott-Clayton in the New York Times, most graduates have relatively manageable debt. That doesn’t mean all is well, however. As she writes:

A continuing refrain of Occupy Wall Street protesters has been “student debt is too damn high,” as James Surowiecki wrote in The New Yorker. In some cases — like for the college graduate profiled in a recent article in the Chronicle of Higher Education who has $100,000 in debt and uncertain job prospects — this is unarguably true. But such cases make for dramatic reading precisely because they are so rare.

Most of those with that much debt have graduate degrees; it is difficult to accumulate that much debt in an undergraduate program. Only one-tenth of 1 percent of college entrants, and only three-tenths of 1 percent of bachelor’s degree recipients, accumulate more than $100,000 in undergraduate student debt. If you have more than $75,000 in undergraduate debt, you are the 1 percent – just not the 1 percent you might have been hoping for.

Of course, the fact that one doesn’t have $75,000 worth of debt doesn’t mean one’s debt is manageable or appropriate. While some 90 percent of people with bachelor’s degrees only manage to graduate less than $40,000 in debt. As the author points out, however, any student loan debt is pretty hard to service if one is unemployed.

What’s likely to be a bigger problem in coming years, according to Scott-Clayton, is that beginning next summer the interest rate on subsidized, government-backed, student loans is going to double, to 6.8 percent. Because that interest rate will apply to new student loans, however, most of the Occupy protesters will be unaffected. Such future loan holders are high school students.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer