Borrowing money for college can be an effective investment, allowing individuals to reap the financial benefits that accrue over time from achieving advanced education.
But the consequences of unmanageable student debt may hinder rather than help many Americans. During the past decade, the amount of outstanding debt on federal student loans jumped from more than $500 billion to over $1.3 trillion, surpassing all categories of household debt other than mortgages. Today, more than 40 million Americans hold student loans, and many struggle with repayment.
Not making loan payments can have long-lasting consequences for borrowers’ credit, hindering the ability to buy a home or get a job, and can also result in wage garnishment and other negative outcomes.
But who is delinquent or in default can be surprising. Borrowers with the highest balances do not necessarily have the most trouble repaying. Instead, borrowers with lower incomes and volatile finances, who may also struggle with other bills, and those who owe the least, often because they did not graduate, may be at particularly high risk.
Across the country, policymakers, higher education institutions, and other experts are working to craft effective, evidence-based solutions to the challenges of student debt. However, a lack of key data has limited those efforts.
The Pew Charitable Trusts has two programs working to address the information gap and improve public and policymaker understanding of this topic.
- The first, student loan research, provides research and analysis on why people default on student loans and how they can recover, and the scope and scale of veterans’ education debt. The aim is to fill a void in the public’s understanding of these issues.
- The second, project on student borrower success, will generate better policy outcomes by conducting research on, and when warranted recommending reform of, two elements of the student loan system that are pivotal to borrower success: loan repayment and loan servicing.