A report from the Pew Research Center reveals overall wealth accumulation for people with student loans versus those without, and a report from The Institute for College Access and Success (TICAS) discusses the challenges of income-driven loan repayment.
Research has established the increasing burden of student loan debt, but a new report from the Pew Research Center presents data connecting student loan debt to various aspects of wealth accumulation. Using government data, the authors present some troubling data for the almost 40 percent of Americans under the age of 40 who have student debt. Some of the findings from the report include:
· College educated citizens with no student debt have a median net worth 7 times greater than citizens with debt, and non-college educated citizens with no student debt have a median net worth 9 times greater than non-college educated citizens with student debt; and
· College educated citizens with student debt have a median overall indebtness of approximately $137,000 compared to $73,250 for those without student debt.
In a related report, TICAS suggests that income-driven loan repayment (IDR) is complicated and requires careful attention to contextual factors. While the authors acknowledge that adopting mandatory IDR would minimize confusion by eliminating consumer choice and would likely reduce default rates, they also caution that borrowers’ access to other forms of credit could be adversely affected by maintaining that debt longer. Furthermore, without addressing broader issues regarding the cost of higher education and accountability systems currently in place, mandatory IDR could “inadvertently create a safe haven for schools that fail to serve students well” and “reduce pressure on governments and colleges to make higher education more affordable.”