Chart of the Day: Here’s Who’s Defaulting on Student Debt

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Alex Tabarrok passes along the chart on the right, which shows the default rate on student loans. What it shows is surprising at first glance: the highest default rates are among students with the lowest debt, not the highest.

But on second glance, this isn’t surprising at all. I’d suggest several good reasons to expect exactly this result:

  • The very lowest debt levels are associated with students who drop out after only a year or so. They have the worst of all worlds: only a high school diploma and a low-paying job, but student debt that’s fairly crushing for someone earning a low income.
  • The next tier of debt is likely associated with students at for-profit trade schools. These schools are notorious for high dropout rates and weak job prospects even for graduates.
  • The middle tier of debt levels is probably associated with graduates of community colleges and state universities. Graduates of these schools, in general, get lower-paying jobs than graduates of Harvard or Cal.
  • Conversely, high debt levels are associated with elite universities. Harvard and Cal probably have pretty high proportions of students who earn good incomes after graduation.
  • The highest debt levels are associated with advanced degrees. The $50,000+ debt levels probably belong mostly to doctors, lawyers, PhDs, and so forth, who command the highest pay upon graduation.

A commenter suggests yet another reason for high default levels at low levels of debt: it’s an artifact of “students” who are already deep in debt and are just looking for a way out: “The word is out if you have bad credit and are desperate for funds just go to a community college where tuition is low and borrow the maximum….Want the defaults to go down — stop lending to students that have a significant number of remedial courses their 1st and 2nd terms at a college where tuition is already low.”

If you’re likely to complete college, student loans are a good investment. But if you’re right on the cusp, you should think twice. There’s a good chance you’ll just end up dropping out and you’ll end up with a pile of student loans to pay back. If you’re in that position, think hard about attending a community college and keeping student loans to the minimum you can manage.

And try majoring in some field related to health care. Occupations in health care appear to have a pretty bright future.

TIME IS RUNNING OUT!

We have an ambitious $350,000 online fundraising goal this month and it's truly crunch time: About 15 percent of our yearly online giving usually comes in during the final week of the year, and in "No Cute Headlines or Manipulative BS," we explain why we simply can't afford to come up short right now.

The bottom line: Corporations and powerful people with deep pockets will never sustain the type of journalism Mother Jones exists to do. And advertising or profit-driven ownership groups will never make time-intensive, in-depth reporting viable.

That's why donations big and small make up 74 percent of our budget this year. There is no backup to keep us going, no alternate revenue source, no secret benefactor. If readers don’t donate, we won’t be here. It's that simple.

And if you can help us out with a donation right now, all online gifts will be matched thanks to an incredibly generous matching gift pledge.

payment methods

TIME IS RUNNING OUT!

We have an ambitious $350,000 online fundraising goal this month and it's truly crunch time: About 15 percent of our yearly online giving usually comes in during the final week of the year, and in "No Cute Headlines or Manipulative BS," we explain why we simply can't afford to come up short right now.

The bottom line: Corporations and powerful people with deep pockets will never sustain the type of journalism Mother Jones exists to do. And advertising or profit-driven ownership groups will never make time-intensive, in-depth reporting viable.

That's why donations big and small make up 74 percent of our budget this year. There is no backup to keep us going, no alternate revenue source, no secret benefactor. If readers don’t donate, we won’t be here. It's that simple.

And if you can help us out with a donation right now, all online gifts will be matched thanks to an incredibly generous matching gift pledge.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate