The student loan crisis is a lot worse if this statement is true.
Here’s what you need to know.
Here’s a shocking claim: 40% of student borrowers don’t have a university degree. Sen. Elizabeth Warren (D-MA) and other Democrats cited this National Center for Education Statistics statistic as justification for President Joe Biden to enact large-scale student loan forgiveness. Let that figure in. Imagine you borrow student loans to go to college and then life happens. For many possible reasons, you are unable to complete your degree. Now you earn a high school salary but owe student loans. It is a heartbreaking experience for anyone to endure. But is this statistic really true? If so, then the student debt crisis could be more serious than expected. If not, the public may have been misled. Let’s explore.
Student Loan Cancellation: 40% of Student Borrowers Didn’t Graduate?
Senator Elizabeth Warren (D-MA) tweeted last year, “As many as 4 in 10 people with student debt couldn’t graduate, many because of high costs, so now they’re in the worst of both worlds: crushed by debt , without a diploma to increase their income.” Warren said financially vulnerable student borrowers are the face of the student debt crisis.Without immediate student loan relief of up to $50,000, Warren predicts millions of student borrowers may not repay their student loans. So, is that correct? According to PolitiFact, a nonpartisan fact-checking website, the answer is overwhelmingly yes. Here is the basis for this startling claim:
- The original data includes student borrowers for one school year. These student borrowers were followed to determine if they had graduated six years later; and
- Result: 38.6% of student borrowers during these six years did not obtain a university degree.
That said, these data pose several problems. First, the data is based on a limited sample size of one school year. Second, some student borrowers might have graduated after more than six years of study. Third, if 40% of student borrowers haven’t graduated, that doesn’t mean they have 40% of the $1.7 trillion in outstanding debt. According to Adam Looney of the Brookings Institution, student borrowers without a college degree hold 23% of all student loan debt. Looney says bachelor’s degree holders hold 64% of student loan debt. So the statement is mostly true based on the data from this study. However, the underlying data has a limited sample size and may produce different results over eight years. So that doesn’t necessarily mean that 40% of today’s 45 million student borrowers, or 18 million borrowers, don’t have a college degree.
Student loan forgiveness: what it means for your student loans
President Joe Biden is actively considering canceling student loans for millions of student borrowers. However, Biden said he would not forgive most student loan debt. This student loan debt statistic could play a pivotal role in shaping the future of student loan forgiveness. Why? First of all, no matter what you think about student loan forgiveness, it’s troubling that 40% of student borrowers don’t have a college degree. Even half that number should be of concern to policy makers. Second, proponents of large-scale student loan forgiveness could use this statistic to highlight the financial difficulties of student borrowers. Third, opponents of large-scale student loan cancellation could use this statistic to support targeted student loan cancellation just for low-income people. As Biden navigates the politics and political waters of student loan forgiveness, it’s critical that you conquer your student loan debt. This includes gaining a full understanding of your student loan repayment options. Here are some of the best ways to pay off student loans and save money: