Myth 1: People Paying Off Debt Are College Graduates
Reality: Our research suggests that 19 percent of adults are currently responsible for paying off a student loan. Perhaps surprisingly, the CCES data suggest that less than half of individuals responsible for paying off a loan and over the age of 26 hold a bachelor’s degree or higher (45 percent do).
According to the Beginning Postsecondary Students survey, 45 percent of those who did not complete a degree defaulted on a loan within 12 years, compared to 8 percent of bachelor's degree recipients.
Myth 2: Student Debt Holders Don’t Matter Politically
Reality: Control of the House comes down to student debt. Based on polling fielded by Data for Progress in late July, support for Democrats among adults without student debt is net +5. Among individuals holding student debt, support for Democrats is net +12. However, currently student debt holders are somewhat less enthusiastic about voting in the midterms. Forty-two percent of student loan holders report being “very” enthusiastic about voting in November, compared with 48 percent of non-student debt holders.
Myth 3: People Who Are Paying Off Student Loans Are All Young
Reality: 1 in 5 people responsible for paying off a student loan are over the age of 50. Forty-seven percent of voting eligible adults are over 50.
Both the number of older Americans with debt and the average debt burden for older Americans have increased significantly over the last decade: between 2005 and 2015, the debt burden for those over 60 went from $12,000 to $23,500.
Some of these people are paying off their own debts, and others are paying off debts incurred by relatives. According to the Federal Reserve, 5% of adults report borrowing to finance a grandchild's education (note that they're looking at all forms of credit, so it could be a student loan, but it could also be something else, like credit card debt).
- Older Americans can be subject to Social Security garnishment if they get behind on their debt: in 2015, 114,000 borrowers were subject to Social Security garnishment.
Myth 4: Student Debt Holders Live In Coastal Cities
Reality: Student debt holders are spread throughout the country, and the student debt burden weighs particularly heavily on midwestern and plains states. The most burdened states include North Dakota, District of Columbia, Vermont, South Dakota, Iowa, Minnesota, Nebraska Maine and Colorado.
Myth 5: Student Debt Doesn’t Affect People of Color
Reality: Sixty-four percent of individuals paying off a student debt are white, 17 percent are black, 11 percent are Latino and 7 percent are another race. Among individuals paying off a student loan without a degree who are over 26, 59 percent are white, 22 percent black, 14 percent Latino and 5 percent another race. Finally, among individuals paying off a loan without a degree over the age of 26 and with an annual family income under $50,000, 55 percent are white, 28 percent are black, 13 percent Latino and 4 percent of another race.
Seventy eight percent of black students borrow to pay for their college education, compared with 58 percent of Latinx students, and 57 percent of white students.
After 12 years, African American borrowers had balances that were 113 percent of what they originally borrowed, whereas white students had actually made progress in paying down their debt (median percentage was 65 percent of original balance). Latino borrowers had paid down a bit of their debt, but the median percentage of original balance was still 83 percent.
Nearly half of African American borrowers defaulted on a student loan within 12 years. Even for those who completed a degree, the rate of default was still high (about 25% for bachelors degree recipients).