| Student loans in the U.S. |
| Regulatory framework |
|---|
| National Defense Education Act Higher Education Act of 1965 HEROES Act U.S. Dept. of Education · FAFSA Cost of attendance · Expected Family Contribution |
| Distribution channels |
| Federal Direct Student Loan Program Federal Family Education Loan Program |
| Loan products |
| Perkins · Stafford PLUS · Consolidation Loans Private student loans |
| This article is part of a series on |
| Education in the United States |
|---|
| Summary |
| Curriculum topics |
| Education policy issues |
| Levels of education |
 Education portal United States portal |
In the United States, student loans are a form of financial aid intended to help students access higher education. In 2018, 70 percent of higher education graduates had used loans to cover some or all of their expenses.[1] With notable exceptions, student loans must be repaid, in contrast to other forms of financial aid such as scholarships, which are not repaid, and grants, which rarely have to be repaid. Student loans may be discharged through bankruptcy, but this is difficult.[2] Research shows that access to student loans increases credit-constrained students' degree completion, later-life earnings, and student loan repayment while having no impact on overall debt.[3]
Student loan debt has proliferated since 2006, totaling $1.73 trillion by July 2021. In 2019, students who borrowed to complete a bachelor's degree had about $30,000 of debt upon graduation.[4]: 1 [5] Almost half of all loans are for graduate school, typically in much higher amounts.[4]: 1 [5] Loan amounts vary widely based on race, social class, age, institution type, and degree sought. As of 2017, student debt constituted the largest non-mortgage liability for US households.[6] Research indicates that increasing borrowing limits drives tuition increases.[7]
Student loan defaults are disproportionately common in the for-profit college sector.[8] Around 2010, about 10 percent of college students attended for-profit colleges, but almost 40 percent of all defaults on federal student loans were to for-profit attendees.[9] The schools whose students have the highest amount of debt are University of Phoenix, Walden University, Nova Southeastern University, Capella University, and Strayer University.[10] Except for Nova Southeastern, they are all for-profit. In 2018, the National Center for Education Statistics reported that the 12-year student loan default rate for for-profit colleges was 52 percent.[11]
The default rate for borrowers who do not complete their degree is three times the rate for those who did.[4]: 1 A Brookings Institution study from 2023 revealed that when the government pauses repayment on student loans, it most often "...benefit[s] affluent borrowers the most..." primarily due to affluent borrowers holding the largest student debt balances.[12][13]
- ^ Hess, Abigail Johnson (February 15, 2018). "Here's how much the average student loan borrower owes when they graduate". CNBC. Retrieved December 20, 2021.
- ^ Ahart, Alan M. (2021). "How the Courts Have Gone Astray in Refusing to Discharge Student Loans: The Folly of Brunner, of Rewriting Repayment Terms, of Issuing Partial Discharges and of Considering Income-Based Repayment Plans". American Bankruptcy Law Journal. 95: 53.
- ^ Black, Sandra E.; Denning, Jeffrey T.; Dettling, Lisa J.; Goodman, Sarena; Turner, Lesley J. (2023). "Taking It to the Limit: Effects of Increased Student Loan Availability on Attainment, Earnings, and Financial Well-Being". American Economic Review. 113 (12): 3357–3400. doi:10.1257/aer.20210926. hdl:10919/100563. ISSN 0002-8282.
- ^ a b c Cite error: The named reference
NPR_2019-07-09was invoked but never defined (see the help page). - ^ a b Weissmann, Jordan (July 16, 2021). "Master's Degrees Are the Second Biggest Scam in Higher Education - And elite universities deserve a huge share of the blame". Slate.
Anyone who reads about how we have $1.7 trillion in outstanding student loan debt should always keep in mind that almost half of all new student loans, in particular, are for graduate school, not for undergraduate. You hear somebody that's got $200,000 or $300,000 in debt; they almost surely went to graduate school. They didn't borrow that much money from the Department of Education to get a bachelor's degree.
- ^ David O. Lucca; Taylor Nadauld; Karen Shen (July 2015). "Credit Supply and the Rise in College Tuition: Evidence from the Expansion in Federal Student Aid programs". Federal Reserve Bank of New York.
- ^ David O. Lucca; Taylor Nadauld; Karen Shen (July 2015). "Credit Supply and the Rise in College Tuition: Evidence from the Expansion in Federal Student Aid programs". Federal Reserve Bank of New York.
We study the link between the student credit expansion of the past fifteen years and the contemporaneous rise in college tuition. To disentangle simultaneity issues, we analyze the effects of federal student loan caps increases using detailed student-level financial data. We find a pass-through effect on tuition of changes in subsidized loan maximums of about 60 cents on the dollar, and smaller but positive effects for unsubsidized federal loans. The subsidized loan effect is most pronounced for more expensive degrees, those offered by private institutions, and for two-year or vocational programs.
- ^ Miller, Ben (August 25, 2018). "The Student Debt Problem Is Worse Than We Imagined". The New York Times. The New York Times. Retrieved July 14, 2019.
- ^ "For-profit colleges increase students' debt, default risk". Cornell Chronicle. Retrieved August 25, 2022.
For-profit colleges – run by private companies that return profits to shareholders – are a growing fixture of the U.S. higher education market, serving almost 1 million students in 2018, or 5% of all enrollments. That's up from 2.9% in 2000, though down from a peak of 9.6% in 2010. ... In 2012, 39% of defaults on federal student loans occurred among borrowers who had attended for-profit colleges – nearly four times the percentage enrolled in the 2010-11 academic year.
- ^ Looney, Adam; Yannelis, Constantine (September 10–11, 2015). "A crisis in student loans? How changes in the characteristics of borrowers and in the institutions they attended contributed to rising loan defaults" (PDF). Brookings Papers on Economic Activity.
- ^ Danilova, Maria (October 5, 2017). "More than half of students at for-profit colleges defaulted on loans, study finds". Chicago Tribune. Retrieved December 20, 2021.
- ^ Turner, Sarah (April 13, 2023). "Student loan pause has benefitted affluent borrowers the most, others may struggle when payments resume". Brookings. Retrieved April 24, 2023.
- ^ Boehm, Eric (April 21, 2023). "Biden's student loan pause overwhelmingly benefited wealthier Americans". Reason.com. Retrieved April 24, 2023.