The Changing Profile of Student Loan Debt: Who Has It, How Big is Their Burden, and How Much Education Did They Receive?

by Irene Lew
Research Assistant

In recent years, the Federal Reserve Bank of New York’s Consumer Credit Panel (FRBNY CCP), which provides quarterly data on outstanding loans using individual consumer credit report data acquired from Equifax, has been utilized extensively to highlight the dramatic growth in student loan debt. Indeed, according to the FRBNY CCP, the increase in student loan debt over the past decade is alarming: aggregate balances averaged $1 trillion in 2013, $775 billion higher than the annual average in 2003, and accounted for over a third (36 percent) of non-housing debt held in aggregate in 2013, up from just 12 percent in 2003.

Since data is released quarterly, the FRBNY CCP is useful for providing up-to-date numbers on current federal and private student loan debt levels. However, the CCP data does have several drawbacks: historical data on student loan debt is not available before 2003, the CCP’s sample is limited to households in which at least one adult has a credit report, only aggregate numbers on outstanding student loan balances are released quarterly to the public, and public information on the demographic characteristics of student loan debtors is limited.

In contrast, the newly released triennial Survey of Consumer Finances (SCF) from the Federal Reserve Board dates back to the 1980s, includes households without credit reports, and is publicly available as a micro-dataset with detailed information on student loan debt balances, as well as a variety of demographic and financial characteristics, including age, income, tenure, education level, race, assets, and other types of outstanding debt.

Both the CCP and the SCF indicate continued growth in aggregate student loan debt, but the SCF shows much slower growth in recent years than data from the FRBNY CCP. In 2013, the SCF’s estimate of $710 billion of aggregate student loan debt was 44 percent lower than the $1 trillion estimate of student loan debt cited by the FRBNY Consumer Credit Panel. The gap between the aggregate estimates of student loan debt from these two sources may be attributed to several factors. As this FRBNY paper points out, the SCF’s sample excludes those in institutions, which may lead to underreporting of debt held by students living in dorms and other institutional housing. Secondly, the SCF’s use of a single survey respondent as a proxy for household finances could result in underreporting of student debt held by adult children or other household members of which the respondent is unaware. However, given that only a decade’s worth of data on student loan debt is available through the CCP, the SCF is still a better dataset for analyzing education-related debt trends because researchers can track changes in student loan debt over a longer period of time under various economic conditions. As many borrowers in the SCF sample are interviewed ten years or more after taking on student loans, researchers are able to analyze the long-term impact of carrying student loan debt. Furthermore, given the greater availability of variables on demographic characteristics and other financial information, one can create a more robust profile of households with student loan debt.

Despite its overall lower estimate of student debt, the SCF still shows that over the past decade, it has become increasingly common for households across all age groups to carry student loan debt (Figure 1). Among households aged 20-29, 43 percent are carrying outstanding student debt, a slight uptick from the 41 percent share in 2010 and 14 percentage points higher than the share in 2001. At the other end of the age spectrum, 23 percent of households aged 40 to 49 and nine percent of those aged 50 and over, have student loan debt, more than double the shares of same-aged households in 2001.

Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances.

On the whole, hefty student loan balances are not common, but the share shouldering a substantial amount of debt has climbed steadily over the past two decades: in 2013, 17 percent of households with student loans had a balance of $50,000 or more, more than double the share in 2001 (7 percent) and nearly five times higher than the share in 1989 (Figure 2). And both younger and older households are saddled with higher student loan debt balances. In 2013, 15 percent of households aged 20 to 29 carried a balance of $50,000 or more, up from just 2 percent in 2001, and 14 percent of households aged 50 and over had a similar debt burden, double the share of same-aged households in 2001.

Note: Excludes households without student loan debt. Shares are based on values that have been adjusted to 2013 dollars using the CPI-U for All Items. 
Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances.

While recent reports, including this one from New America, have attributed the growth in student debt levels to those who are obtaining graduate and professional degrees, the SCF shows that households headed by a recipient of a graduate degree or higher made up 35 percent of those with $50,000 or more in outstanding student loans in 2013, down from 72 percent in 2001 (Figure 3). In fact, the most indebted households are now more likely to be headed by an adult who earned a bachelor’s degree or less. Among the most indebted households headed by an adult without a bachelor’s degree, those who started but did not complete college represented more than a third (37 percent) of this group. Furthermore, those under the age of 40 accounted for 57 percent of the most indebted households headed by an adult without a bachelor’s degree in 2013, though nearly a quarter of this group is aged 50 or over.

Note: Excludes households without student loan debt. Shares are based on values that have been adjusted to 2013 dollars using the CPI-U for All Items. Education level is for highest degree earned by head of household. Less than a bachelor’s degree includes households with a head who started but did not complete college, who earned an associate degree, or those whose highest educational attainment was a high school diploma, GED or less. Graduate degree or higher refers to households headed by a recipient of a graduate degree, doctorate or other professional degree. 
Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances.

Much of the discussion around student loan debt is around the idea that it is a major stumbling block in the housing recovery, inhibiting young households’ access to homeownership. However, other groups with rising student loan burdens—older households and those without a bachelor’s degree—have not garnered as much attention. The growing share of less-educated households with a significant amount of student loan debt is especially worrisome, given that this group is much less likely to earn sufficient income to meet their monthly debt obligations. We’ll be doing a more thorough analysis to address these issues over the coming months.