The higher-education affordability movement was triggered in part by concerns that students are digging themselves into a lifelong hole of debt by taking out loans to finance their studies. However, a new survey shows that hole may be fairly manageable for most students.
OnCampus Research, part of the NACS subsidiary indiCo, asked students about their current levels of loan debt and other financial matters. Overall, 39% of student respondents said they had accumulated no debt at all toward their education so far.
Students are more likely to take out loans in their upperclassman years after exhausting other sources of money. To compare, 46% of first-year students said they were debt-free while only 30% of fourth-year students could say the same. Many graduate students, despite facing higher tuition costs and possible debt left from their bachelor’s studies, are doing all right; 39% of them currently have zero debt from student loans.
Among students who have borrowed for their education, more than half are deferring payments until they graduate and can get a full-time job. The rest are paying at least a little while they’re still in school.
However, the amount of debt that most students are shouldering appears to be within acceptable boundaries, contrary to numerous news reports about a debt “crisis.” The rule of thumb, according to the federal Consumer Financial Protection Bureau, is that a student’s total loan debt should not exceed the annual salary the student could reasonably expect to earn in their particular field in the first year after graduation.
About a quarter of all students say they have less than $10,000 in educational debt and 21% have $10,000-$30,000. Only 6% have accumulated $50,000 or more in student-loan debt at this point and some of those are working on degrees in high-paying fields such as medicine, law, or engineering.