--- title: Student Loan Debt: The Real Victims description: The crisis is among students with relatively little debt but dismal job prospects canonical: https://time.com/3952164/student-loan-debt-crisis/ author: Robert Kelchen article:opinion: true article:content_tier: free article:published_time: 2015-07-10T13:34:37.000Z article:modified_time: 2026-08-04T07:38:16.642Z article:section: Ideas og:title: The Real Victims of the Student Loan Debt Crisis og:description: The crisis is among students with relatively little debt but dismal job prospects og:url: https://time.com/3952164/student-loan-debt-crisis/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt5be17cb07a593124/69885a58a988ca40e76b365d/gettyimages-83907146.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 og:image:width: 3611 og:image:height: 2031 og:image:alt: 83907146 og:type: article twitter:card: summary_large_image twitter:title: The Real Victims of the Student Loan Debt Crisis twitter:description: The crisis is among students with relatively little debt but dismal job prospects twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt5be17cb07a593124/69885a58a988ca40e76b365d/gettyimages-83907146.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 ---  # The Real Victims of the Student Loan Debt Crisis > Sponsored content. 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Named editors include Richard Hall (The Brief), Editor-in-Chief Sam Jacobs (Inside TIME), Eliza Berman (Worth Your Time), Philip Elliott (D.C. Brief), Justin Worland (Future Proof) and Harry Booth (In the Loop). Health Matters is written by TIME's health desk. #### How do I sign up for a TIME newsletter? Go to time.com/newsletters, choose the newsletters you want and enter your email address. There is no cost and no subscription requirement. ## Video: Millennial Money Turnoffs [Watch (HLS stream): Millennial Money Turnoffs](https://cdn.jwplayer.com/manifests/4gv80AkC.m3u8) (1:57)  _Published 2015-05-27. Student loan debt is understood and overlooked by our millennials, but credit card debt and lack of responsibility are big no-nos._ by [Robert Kelchen / The Conversation](https://time.com/author/robert-kelchen/) ## Robert Kelchen / The Conversation Jul 10, 2015 1:34 PM UTC  woman's hand in money jar woman's hand in money jar Jeffrey Coolidge—Getty Images by [Robert Kelchen / The Conversation](https://time.com/author/robert-kelchen/) ## Robert Kelchen / The Conversation Jul 10, 2015 1:34 PM UTC Americans owed [nearly US$1.2 trillion](http://www.newyorkfed.org/householdcredit/2015-q1/data/pdf/HHDC%5F2015Q1.pdf) in student loan debt as of March 2015, [more than three times](http://www.newyorkfed.org/studentloandebt/index.html) the amount of debt from just a decade ago. Part of this increase in debt is due to more students attending college, but part can also be attributed to just the [borrower holding more debt](http://ticas.org/sites/default/files/pub%5Ffiles/Debt%5FFacts%5Fand%5FSources.pdf). Between the 2007-08 and 2011-12 academic years, nationally representative data from the US Department of Education show the median debt among graduating college seniors who took out loans [rising from $20,000 to $26,500](https://nces.ed.gov/datalab/postsecondary/index.aspx). This [trend](http://trends.collegeboard.org/college-pricing/figures-tables/published-prices-national#Published%20Charges%20over%20Time) has likely continued over time due to rising tuition prices, meaning that the 70% of students who borrow for a four-year degree can expect to take on over $30,000 in debt in the future. Many students are struggling to repay their loans, [as evidenced by high rates](http://libertystreeteconomics.newyorkfed.org/2015/02/payback%5Ftime%5Fmeasuring%5Fprogress%5Fon%5Fstudent%5Fdebt%5Frepayment.html#.VZGCeUaBwZw) of default, delinquency and forbearance due to economic hardships. These concerns have led some politicians (primarily Democrats) to call mounting student loan debt a “[crisis](http://www.warren.senate.gov/?p=press%5Frelease&id=764),” while offering potential solutions such as reducing interest rates on student loans, allowing students to refinance their loans at lower rates, or more recently, proposing debt-free public higher education. But is student loan debt really a crisis? ## Debt crisis for whom? As a professor whose research focuses on higher education finance and accountability policy — and who married an attorney with lots of student loan debt — I look at the student “debt crisis” differently. I can see the types of students for whom debt is a crisis. Although there are some exceptions, the crisis is generally not with people like my wife and me, who have advanced degrees and the ability to manage high debt payments due to earning more money (and knowing whether and how to use [income-based repayment programs](http://www.edcentral.org/beware-savvy-borrowers-using-income-based-repayment/) that cap debt payments at a certain percentage of one’s income). Rather, the crisis is among students with relatively little debt but dismal job prospects. [Research by the New York Federal Reserve Bank](http://libertystreeteconomics.newyorkfed.org/2015/02/looking%5Fat%5Fstudent%5Floan%5Fdefaults%5Fthrough%5Fa%5Flarger%5Fwindow.html#.VZGCdkaBwZw) found that 35% of students with less than $5,000 in debt defaulted within six years, twice the rate of students with more than $100,000 in debt. Additionally, these students with low debt amounts and low earnings are disproportionately likely to be dropouts. Sixty-three percent of students who started college in 2003-04 and defaulted on their loans by 2009 were college dropouts, while students with a bachelor’s or associate degree were [only 4% of defaults](http://www.edcentral.org/defaulters/). ## Impact of debt Student loan debt has also been blamed for a range of other negative outcomes in various media articles, including delaying [marriage](http://www.nbcnews.com/business/personal-finance/burdened-record-amount-debt-graduates-delay-marriage-n219371), [having children](http://www.wsj.com/articles/SB10001424052702304818404577350030559887086) and [purchasing a home](http://www.bloomberg.com/news/articles/2015-02-18/student-debt-may-be-sabotaging-your-shot-at-buying-a-home). The raw data certainly support the relationship between student loan debt and delaying these key markers of adulthood. It is true that the home ownership rate of young adults without debt [exceeded the rate of those with debt](http://libertystreeteconomics.newyorkfed.org/2015/02/the%5Fstudent%5Floan-landscape.html#.VZGBd0aBwZw) for the first time in 2012. But identifying a causal impact of student loan debt on these outcomes is harder to do: the characteristics of the types of people who went to college and borrowed are different from those who either did not go to college or went to college without taking on debt. For example, students may not borrow for college if their parents foot the bill — and these individuals may also get help putting down a down payment for a house. Part of the declining home ownership rate among those with debt is likely because college graduates [are more likely to move to expensive urban areas](http://www.nytimes.com/2014/10/20/upshot/where-young-college-graduates-are-choosing-to-live.html?abt=0002&abg=1) than those who did not attend college or take on any debt. Most of the students with little debt are dropouts, not graduates. In my view, the best empirical research examining whether student loan debt affects home ownership is a working paper by [Jason Houle](http://dartmouth.edu/faculty-directory/jason-houle) and [Lawrence Berger](https://socwork.wisc.edu/lonnie-berger) that has found [a significant, but small, relationship](http://www.appam.org/assets/1/7/Is%5FStudent%5FLoan%5FDebt%5FDiscouraging%5FHome%5FBuying%5FAmong%5FYoung%5FAdults.pdf) between student loan debt and home ownership. However, two different factors could be at play to cause this relationship. It could be because prospective buyers with debt are unable to obtain a mortgage due to part of their income being needed to pay off student loans. But it could also be because those with debt perceive that they will be rejected if they apply for a loan (even though it may not be true). ## Who should be the focus of policy Student loan debt is increasingly becoming an unpleasant part of life for millions of Americans, but for many borrowers — particularly those with advanced degrees and high debt burdens — debt is far from a crisis. For example, the Brookings Institution’s Elizabeth Akers [stated in her recent congressional testimony](http://www.help.senate.gov/imo/media/doc/Akers2.pdf) that although the length of student loan payments has increased over time, the average monthly payment has barely increased. Senator Elizabeth Warren, a darling among progressives, [pushed back](http://www.help.senate.gov/hearings/reauthorizing-the-higher-education-act-ensuring-college-affordability) against Akers, contending that the increasing length of payments construes a debt crisis. While I’m certainly sympathetic to students frustrated by years of student loan payments, policies designed to help struggling borrowers should focus on students with the greatest need. Students who left college without a degree and are unable to find a decent job are facing a crisis as they struggle to make ends meet. Our limited resources should be used to help these students complete a credential and repay their loans instead of targeting lawyers with six-figure debt loads. [_Robert Kelchen_](http://theconversation.com/profiles/robert-kelchen-177437) _is Assistant Professor of Higher Education at_ [_Seton Hall University_](http://theconversation.com/institutions/seton-hall-university)_._ _This article was originally published on_ [_The Conversation_](http://theconversation.com)_. Read the_ [_original article_](http://theconversation.com/is-student-loan-debt-really-a-crisis-44069)_._ ## Transcript [ MUSIC ] A financial deal breaker for me would just be dishonesty. One thing I think myself and a lot of analysts are willing to overlook is student debt. That's sort of become a prerequisite to just existing in the world now with the price of college. If you have pursued higher education, you probably have debt and you probably have a lot of it. Then what matters is what you do about it. I'm not really cool with just making the minimum payment, though. Especially if you can afford to pay a little bit more and get it wiped out a little bit more quickly. I want to a very expensive, private under- grad school, I met met my wife at a very expensive, private under- grad school. I think anyone who is not willing to at least consider dating a similar student that would maybe not have anyone consider them, either- I do not think I would be able to deal with instability in terms of how you manage your money, in terms of your job. I'm very driven in my life, and so I want someone who, they don't necessarily have to want to be president or like, some top echelon position, but just that they have things that they want to achieve and they're very motivated to do it. I would not be able to be with someone who wouldn't Put away some things that they would like in the here and now for that future. Obviously financial responsibility is important. But materialism is a big turnoff, actually. I really don't like debt of any kind if I can help it. And I also think that a deal breaker is just not being compatible in how you view and spend money. It could potentially be a deal breaker. For instance, I value experiences over stuff. Things that I would never like, kind of like extravagant credit card debt, or just any kind of debt for no reason. That's probably kind of a red flag. 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