New data from the U.S. Department of Education takes a much of the political chatter going on about student debt and flips it on it’s head. Amazingly, it shows that students who borrow the least to attend college are the most likely to default on their loans, and that those who borrow the most become the biggest salary earners over time. Some key findings:
- Graduate degree winners borrow more than anyone else, and they have also seen the biggest salary gains among all students.
- Only 2% of all undergraduate students borrow more than $50,000., and those who do tend not to default on their loans at a high rate.
- Students who take out the smallest loans actually have the greatest likelyhood of defaulting. Of students who borrow less than $5,000. For college, an amazing 54% are defaulting on their loans. By comparison, only 18% of those who have borrowed over $100,000. are in default.
The main lesson of the DOE’s numbers: the biggest reason people default on student loans is that they fail to finish their degree programs. Students who borrow money to attend either two or four year degree programs but don’t finish the program are plagued by high unemployment rates, making it hard for them to pay back even the smallest loans.
Find out more about the student debt data here.