Record One-in-Five Households Has Student Loan Debt, Burden Greatest On Young, Poor

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By Richard Fry, Pew Research Center— Nearly one out of five (19%) of U.S. households owed student loan debt in 2010.

That’s more than double the share two decades earlier and a significant rise from the 15% that owed such debt in 2007, just prior to the start of the Great Recession, according to a Pew Research Center analysis of newly available government data.

A record 20% of U.S. households owe student loan debt. Student load debt disproportionately affects the poor and the young.

A record 20% of U.S. households owe student loan debt. Student load debt disproportionately affects the poor and the young.

The Pew Research analysis also finds that a record 40% of all households headed by someone younger than age 35 owe such debt, by far 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. This is true 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 loan debt has increased in nearly every demographic and economic category, as has the size of that debt.

Among households owing student loan debt, the average outstanding student loan balance increased 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 (all dollar figures adjusted for inflation and in 2011 dollars).

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

Student Loan Debt Burdens The Poor, Young

While those at the upper end of the income scale are more likely than others to owe student loan debt, when one considers the resources that households have at their disposal to meet their debts, the relative burden of student loans is much greater for those at the lower end.

In 2010 outstanding student loan debt was nearly a quarter, 24%, of the household income of the lowest fifth of households by annual income.

Average Amount of Student Student Loan Debt

Average Amount of Student Student Loan Debt

Because outstanding student loan debt has been rising and household incomes have been falling since 2007, outstanding educational debt has risen as a share of household income for all income groups considered.

The outstanding student-debt-to-income ratio nearly doubled for the richest fifth of households from 2007 to 2010.

But it remains the case that in both years the ratio of student loan debt to income was markedly higher for the lowest fifth of households by income.

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.

Leverage ratios, or comparing the outstanding student debt to the household’s assets, tell a similar story.

The outstanding student debt in 2010 was 2.2% of the total value of the assets owned by the lowest fifth of households by income.

The student debt was only 1.1% of the assets owned by the richest ninth of households and a mere 0.2% of the assets owned by the richest tenth of households.

Rising student loan debt burdens can also be evaluated in light of the other debts owed by households, such as property-related debt, credit card debt and all installment debt.

Student debt is a growing share, rising from 3% of outstanding total debt owed by households in 2007 to 5% of all debts in 2010. This reflects growing outstanding student debt and the fact that households have reduced their other debts.

Average household indebtedness fell from $105,297 in 2007 to $100,720 in 2010.

All households have not shared the decline in total indebtedness in spite of rising student debt burdens.

The average total indebtedness of the lowest fifth of households by annual income rose from $17,579 in 2007 to $26,779 in 2010.

Total indebtedness for households in the middle and upper fifths of the income distribution either remained unchanged or declined.

The lowest income households have mounting debt obligations in addition to mounting student debt obligations, while the nation’s higher income households have declining other debts in the face of mounting student debt obligations.

Click here to view the full student loan debt report

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