The study found that high debt is most prevalent among students who graduated from for-profit institutions, where more than 50 percent of 2007-08 bachelor’s degree recipients graduated with $30,500 or more in debt. Nonfederal borrowing is also most widespread in this undergraduate segment. Among for-profit bachelor’s degree recipients, 65 percent of borrowers had an average of $11,300 in nonfederal debt — in addition to their federal student loans.
Dr. Sandy Baum, professor emerita of economics at Skidmore College and one of the study’s authors, said in a statement, “Students using nonfederal loans to pay for college are of particular concern because private student loans generally have higher interest rates and do not come with the same repayment protection as federal student loans. These are the students who are more likely to face repayment difficulties.”
The overwhelming majority of high-debt graduates have federal loans. But there are student segments with high debt who have relatively low federal loan obligations. Among high-debt graduates, the highest incidence of this pattern is among affluent Asian students. The report also found that dependent White and Asian bachelor’s degree recipients have higher average nonfederal debt than do Blacks and Hispanics/Latinos.
The highest concentration of nonfederal debt is among dependent students from families with incomes of $100,000 or higher, for whom 70 percent of the debt is nonfederal. It is quite likely that many of these families never apply for federal financial aid so are not offered federal student loans, according to the College Board.
