Dealing With Debt 199293 College Graduates Ten Years Later

1
Dealing With Debt199293 College Graduates Ten
Years Later
23rd Annual Student Financial Aid Research
Network Conference June 2224, 2006

• Susan ChoyXiaojie Li
• MPR AssociatesBerkeley, California
• schoy_at_mprinc.com

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Dealing With Debt

• Undergraduate borrowing among 199293 college
  graduates
• Borrowers versus non-borrowers 10 years later
• Experience repaying undergraduate loans 
• Implications for current borrowers

3
Data Sources

• NCES Baccalaureate and Beyond Study (BB)
• Earned bachelors degree in 199293
• Sample size 10,000
• Follow-up interviews in 1994, 1997, and 2003
• National Student Loan Data System (NSLDS)
• - Information on Stafford loan repayment

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Undergraduate Borrowing by Income and Dependency
Status
Average amount borrowed
10,200
51
Total
DEPENDENT
10,200
67
Lowest
Low middle
9,100
47
38
High middle
11,500
Highest
25
12,600
62
9,800
INDEPENDENT
0
20
40
60
80
100
Percent
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03).
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Borrowers Versus Non-Borrowers 10 Years Later

• No meaningful difference in percentage with

• Any further degree/certificate enrollment (48)
• Any graduate degree attainment (26)
• Masters degree (20)
• Doctoral degree (2)
• First-professional degree (4)
•  

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Borrowers Versus Non-Borrowers 10 Years Later

• Employed (and not enrolled) (80)
• Neither employed nor enrolled (12)
• Married (73)
• OR
• Median salary in
• 1994 (20,000)
• 1997 (30,000)
• 2003 (49,000)

• No meaningful difference in percentage who were

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Graduate Borrowing by 2003
Percent
Average
ALL WITH GRADUATE ENROLLMENT
45
33,200
Highest attainment by 2003 No graduate
degree Masters degree Doctoral
degree First-professional degree
23,300 22,900 44,100 75,500
32 45 64 79

ALL WHO BORROWED AT BOTH LEVELS
27
41,700
Highest attainment by 2003 No graduate
degree Masters degree Doctoral
degree First-professional degree
32,500 32,500 52,900 88,900
22 28 33 41
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03).
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Repayment Status in 2003

• Among borrowers with no additional degree
  enrollment
• 74 had finished repaying their undergraduate
  loans in 2003
• 26 still owed (23 were making payments)
• Under standard 10-year repayment plan, borrowers
  would still be making payments when interviewed
  if
• Borrowed more than about 4,000 (80 of
  borrowers)
• Graduated late in the academic year (majority)
• Had deferment, period of forbearance, or default
  or used an alternative repayment plan
• Suggests Many paid off their loans early.

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Repaying Undergraduate Loans in 2003
Average amount borrowed
Average monthly payment
Percent
Total
23
13,400
150
Amount borrowed as undergraduate Less than
5,000 5,000-9,999 10,000-14,999 15,000 or
more
4 20 36 38
3,400 7,200 11,400 20,600
100 100 140 200
Salary in 2003 Lowest quarter Low middle
quarter High middle quarter Highest quarter
24 28 21 19
12,100 14,000 13,000 14,700
130 160 160 150
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03). Limited to undergraduate borrowers
with no additional degree enrollment.
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Distribution of Loan Repayers by Debt Burden
Percent
100
Median 6.7
Median 3.3
80
63
60
40
33
30
26
21
16
20
8
3
0
gt 12
lt 5
5-8
9-12
gt 12
lt 5
5-8
9-12
1994
2003
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03). Limited to undergraduate borrowers
with no additional degree enrollment who were
making payments.
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Stafford Loan Repayment Difficulties
Average years to first incidence
Percent
Deferred payment Had period of forbearance Default
ed
5 12 10
3.9 4.8 3.9
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03). Limited to undergraduate Stafford
loan borrowers with no additional degree
enrollment.
12
Ever Deferred Payment on a Stafford Loan
Percent
50
40
30
20
13
10
10
8
7
5
4
4
3
0
Lowest
Low middle
Highmiddle
Highest
Less than 5,000
5,000-9,999
10,000-14,999
15,000or more
Total amount borrowed
Salary in 1994
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03). Limited to undergraduate Stafford
loan borrowers with no additional degree
enrollment.
13
Ever Had a Period of Forbearance on a Stafford
Loan
Percent
50
40
30
26
21
20
20
17
11
10
8
10
5
0
Lowest
Low middle
Highmiddle
Highest
Less than 5,000
5,000-9,999
10,000-14,999
15,000or more
Salary in 1994
Total amount borrowed
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03). Limited to undergraduate Stafford
loan borrowers with no additional degree
enrollment.
14
Ever Defaulted on a Stafford Loan
Percent
50
40
30
20
20
17
12
12
8
8
10
7
4
0
Lowest
Low middle
Highmiddle
Highest
Less than 5,000
5,000-9,999
10,000-14,999
15,000or more
Salary in 1994
Total amount borrowed
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03). Limited to undergraduate Stafford
loan borrowers with no additional degree
enrollment.
15
Stafford Loan Defaults
Percent who defaulted
Average amount in Stafford loans
Total Any deferments Any forbearance
10 21 20
10,000 10,400 10,900
Average Stafford loan, all undergraduate
borrowers 7,800 Defaulters who re-entered
repayment 45
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03). Limited to undergraduate Stafford
loan borrowers with no additional degree
enrollment.
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Percentage Distribution According to Loan Amount
and Salary in 1994
Ever defaulted
Never defaulted
Stafford loan amount Less than
5,000 5,000-9,999 10,000-14,999 15,000 or
more
100
100
27 25 30 18
38 31 23 8
Salary in 1994 Lowest quarter Low middle
quarter High middle quarter Highest quarter
100
100
29 32 26 12
14 24 32 29
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03). Limited to undergraduate Stafford
loan borrowers with no additional degree
enrollment.
17
Changes in Who Borrows for Undergraduate Education
1992-93
1999-2000
Percent
100
80
72
70
68
67
62
62
60
47
46
38
40
25
20
0
Lowest
Lower middle
Upper middle
Highest
Independent
Dependent
Family income and dependency status
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03).
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Among those Repaying Loans in 2003, Salary in
2003 Versus 1994
Salary in 2003
Lowest
Highest
Lower middle
High middle
Total
28
27
24
21
Salary in 1994 Lowest quarter Low middle
quarter High middle quarter Highest quarter
18 16 30 28
41 43 22 10
11 9 21 41
31 32 27 21
SOURCE U.S. Department of Education, National
Center for Education Statistics, 1993/03
Baccalaureate and Beyond Longitudinal Study
(BB93/03). Limited to undergraduate borrowers
repaying loans and no additional degree
enrollment.
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Reports

• To be released by NCES in July
• Dealing With Debt 199293 College Graduates 10
  Years Later (NCES 2006-156)
• Related reports (Available at http//nces.ed.gov/p
  ubsearch/)
• Debt Burden A Comparison of 199293 and
  19992000 Bachelors Degree Recipients a Year
  After Graduating (NCES 2005-170) 
• Debt Burden Four Years After College (NCES
  2000-188)
• Early Labor Force Experiences and Debt Burden
  (NCES 97-286)