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Major Student Loan Debt Is Exception, Not Rule, Analysis Shows

The image of students mired in mountains of debt may be needlessly scaring potential college students, a new report out June 24 from the Brookings Institution finds.

Only a small percentage of borrowers are wallowing in massive levels of debt, according to the report, based on an analysis of data collected from 1989 to 2010 as part of the Survey of Consumer Finances. The Brookings researchers—Beth Akers and Matthew Chingos—note that increases in income have more than kept pace with debt load, and that typically borrowers are no worse off than a generation ago.

Just 7 percent of young-adult households paying off student loans have $50,000 or more in debt, the research revealed. About 58 percent have less than $10,000 in debt, and 18 percent are carrying loans between $10,000 and $20,000.  The monthly payment burden faced by student loan borrowers (about 3 to 4 percent of their monthly income) has stayed about the same or even lessened over the past two decades, report showed.

The New York Times' take on the new information is that the deeply indebted college graduate is an outlier and attention instead should be focused on the vastly bigger problem of students with debt who drop out without the increased earning power of a degree to help pay back their loans. Improving college completion rates depends on better, more cost-effective education, rather than merely cheaper education, the Times notes.

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