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Manhattan Institute

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Issues 2016: Is There a Student Debt Crisis?

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Issues 2016: Is There a Student Debt Crisis?

June 9, 2016
EducationHigher Ed
EconomicsOther

Abstract

Student debt is a convenient target in a presidential election year, but it obscures the true crisis: high dropout rates from low-quality postsecondary institutions and the unmanageable debt borne by students of those institutions. And despite rising student debt, monthly loan payments as a share of income have remained steady, added earnings having more than offset the cost of debt for most borrowers, and Income-Based Repayment (IBR) plans offer borrowers protection from ballooning monthly payments.

Key Findings

  • Even as overall student debt has been rising, the monthly burden on most borrowers has not increased. 
  • Those struggling with student debt are overwhelmingly “nontraditional borrowers” who took out loans to attend, but often did not graduate from, two-year and for-profit institutions.
  • The benefits of many proposals to reduce student debt burdens flow overwhelmingly to college graduates, the group least in need of government assistance. 

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