Who owes all that student debt? And who’d benefit if it were forgiven?

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Student debt is a big issue in the 2020 presidential campaign for an obvious reason: There’s a lot of it—about $1.5 trillion, up from $250 billion in 2004. Students loans are now the second largest slice of household debt after mortgages, bigger than credit card debt. About 42 million Americans (about one in every eight) have student loans, so this is a potent issue among voters, particularly younger ones.



Q. How many student loan borrowers are in default?
A. The highest default rates are among students who attended for-profit institutions. The default rate within five years of leaving school for undergrads who went to for-profit schools was 41% for two-year programs and 33% for four-year programs. In comparison, the default rate at community colleges was 27%; at public four-year schools, 14%, and at private four-year schools, 13%.

Put differently, out of 100 students who ever attended a for-profit, 23 defaulted within 12 years of starting college in 1996 compared to 43 among those who started in 2004. In contrast, out of 100 students who attended a non-profit school, the number of defaulters rose from 8 to 11 in the same time period. In short, the government has been lending a lot of money to students who went to low-quality programs that they didn’t complete, or that didn’t help them get a well-paying job, or were outright frauds.

Q. Which student loan borrowers are most likely to default?
A. According to research by Judy Scott-Clayton of Columbia University, Black graduates with a bachelor’s degree default at five times the rate of white bachelor’s graduates—21% compared with 4%. Among all college students who started college in 2003–04 (including borrowers and non-borrowers), 38% of Black students defaulted within 12 years, compared to 12% of white students.