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PEDAR: Executive Summary Debt Burden Four Years Later
Borrowing for Education
Debt Status in 1997
Debt Burden
Research Methodology
Full Report (PDF)
Executive Summary (PDF)
Debt Burden

Monthly Loan Payments as a Percentage of Income

The undergraduate borrowers with no further enrollment by 1997 were well positioned to repay their loans. Almost all (88 percent) were employed full time, and their average income in 1996 was $35,300. The median monthly debt burden (the percent of monthly income used to repay loans) for those in repayment was 5 percent. Approximately 8 out of 10 had debt burdens of less than 10 percent. To place this debt burden in context, housing lenders typically use an 8 percent rule for student loan debt.

The median debt burden of those who had further enrollment but were repaying their loans was similar to the median debt burden of those with no further enrollment (6 percent).

About half of undergraduate borrowers were married in 1997. The median household debt burden was 3 percent for those without further enrollment. Even among those where the total amount borrowed by both spouses was $15,000 or more, the median debt burden was 5 percent. Thus, the added income of a spouse appears to lessen the burden of student loans.

Other Indicators of Debt Burden

Among 1992–93 bachelor’s degree recipients, there is no evidence that borrowing for education affects lifestyle choices such as the timing of marriage or major purchases such as a car or house. One-half (50 percent) of nonborrowers were married in 1997, as was also true for borrowers. The percentages who were married in 1997 did not differ among any of the three groups of borrowers (those with no further enrollment, those with further enrollment but in repayment, and those with further enrollment and not in repayment) or between any of these groups of borrowers and nonborrowers. Also, no differences were observed in the percentages owning a car or another vehicle in 1997: about 9 out of 10 did so regardless of borrowing or enrollment status.

There was one difference regarding the purchase of a house or condominium. Those who borrowed for undergraduate education, enrolled for further education, and were not in repayment were less likely to own a house or condominium in 1997 (34 percent) than were nonborrowers or borrowers with no further enrollment (43 percent each). This finding might reflect the fact that many of those with further enrollment who were not in repayment were still enrolled in 1997.

The percentages of 1992–93 bachelor’s degree recipients who were saving money might also provide clues as to whether education debt causes economic hardship for undergraduate borrowers. If repaying education loans were causing serious financial stress, one might expect to see those with high debt burdens less likely to save. However, this was not the case. Among those who borrowed for their undergraduate education but did not enroll for further education, 70 percent were saving for some purpose in 1997, the same percentage as nonborrowers. A similar proportion of those who enrolled for further education and were repaying their loans in 1997 were saving (66 percent). Among those who enrolled for further education and were not repaying their loans in 1997, 60 percent were saving. This was a smaller percentage than that for borrowers who had not continued their education or for nonborrowers (70 percent each); however, some were still enrolled and therefore might not be expected to be saving.

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