Lending

One of Five Households Has Student Loan Debt

Burden is greatest on the young and poor, report reveals.

April 08, 2013
KEYWORDS debt , households , loan , student
/ PRINT / ShareShare / Text Size +
iStockphoto/Thinkstock®

About one-fifth (19%) of the nation’s households owed student debt in 2010—more than double the share two decades earlier and a significant rise from the 15% that owed such debt in 2007, according to a Pew Research Center analysis of newly available government data.

The Pew Research analysis also finds that a record 40% of all households headed by someone younger than age 35 owe such debt—the highest share among any age group.

It also finds that, whether computed as a share of household income or assets, the relative burden of student loan debt is greatest for households in the bottom fifth of the income spectrum, even though members of such households are less likely than those in other groups to attend college in the first place.

Since 2007, the incidence of student debt has increased in nearly every demographic and economic category, as has the size of that debt.

Puppet rappers Business Barry and Squeaky sing the praises of credit unions and educate consumers about student loans in a series of videos powered by LendKey, a CUNA Strategic Services alliance provider.

Among households owing student debt, the average outstanding student loan balance grew from $23,349 in 2007 to $26,682 in 2010. Most debtor households had less than $50,000 in outstanding student debt in 2010, but the share of households owing elevated amounts has increased.

In 2007, 10% of student debtors owed more than $54,238. By 2010, 10% of student debtor households owed more than $61,894 (after adjusting for inflation).

While every income group had more total student loan debt in 2010 than in 2007, the increases were greatest at the two extremes of the income distribution—households in the lowest fifth of households by annual income and in the highest fifth—than in the middle three-fifths.

In 2010, the least affluent fifth of households owed 13% of the outstanding student debt, up from 11% in 2007. Similarly, the share of the outstanding student debt pie owed by the richest fifth of households rose from 28% in 2007 to 31% in 2010.

While those at the upper end of the income scale are more likely than others to owe student loan debt, the relative burden of student loans is much greater for those at the lower end.

In 2010, outstanding student debt was nearly a quarter (24%) of the household income of the lowest fifth of households by annual income. By comparison, student loan debt accounted for only 7% of household income for those in the ninth decile of household income, and only 2% for those in the 10th decile (90% or higher).

Student debt represented 15 cents of every dollar of household income for the lowest fifth of households in 2007. Even with the recent run-up, educational debt represents a much smaller share of household income for the richest fifth of households in comparison to the lowest fifth of households by annual income.

Post a comment to this story

heroes

What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive