2. For-profits
At first glance, there’s been an alarming increase in the number of four-year college graduates with very large debts. Back in 2004, only 1% of students who earned a bachelor’s degree that year had borrowed $50,000 or more, adjusted for inflation. That grew to 10% in 2012.
With colleges hiking tuition prices well above the inflation rate, heavy debts aren’t surprising. Still, they’re not commonly carried by conventional undergraduates.
“Those who do have this high level of debt disproportionately are in the for-profit sector, independent of their parents, or in school for more than four years,†wrote Baum and her co-author, Martha Johnson.
Graduates of for-profit schools accounted for a quarter of the students who were graduating from college in 2012 with more than $50,000 in debt, but they constituted only 9% of all degree recipients. By contrast only 6% of students who earned their degrees from a public four-year school had such a high level of debt. At private non-profit colleges, 12% of graduates had high debts, still less than half the rate of the for-profits.
3. Dropouts
People who didn’t complete their degrees account for 59% of the students with low debts, that is, debt between $1 and $10,000. Those without college degrees are less likely to pay back their student debt, not only because they often can’t get a high-paying job, but also because “some people feel ripped off and they shouldn’t have to pay it back,†explained Baum.
One sign that smaller debtors like these are driving the default rates is that the average debt of people in default is roughly $14,000, much less than the average student’s debt of almost $23,000. It’s not a small universe of people; 41% of those who start college fail to complete a four-year degree in six years. Completion rates are even lower at community colleges.
How to help these students with their debts is a tough problem. “You don’t want to say, ‘if you don’t graduate, we won’t make you pay,’†explained Baum.
There is already help, though, for many students. The federal government already has special repayment programs in place, including three different ways to lower monthly payments based on your income. If you’re under 150% of the poverty line, you pay nothing. Above that, borrowers pay 10—20% of their income.  And if you enter public service, the federal government can wipe out your student debt after 10 years.
The programs are still new and people complain about bureaucratic red tape, but they’re good news for the teaching profession. Those who received master’s degrees in education accounted for 17% of the graduate students that had $50,000 or more in debt. A public school teacher can qualify for both pay-as-you-earn loan payment reductions and public service debt forgiveness. After 10 years of teaching, and making income-based payments, a public schoolteacher’s student loan should disappear.
The student debt debate, at least in political circles, often ignores that.