The rise in student debt was already a problem before COVID-19, but the massive economic hardships caused by the pandemic, including a surge in unemployment, have put some groups in even worse financial straits than before.
Student loans are among the largest contributors to family debt. The U.S. Department of Education estimates that the total outstanding federal student loans in 2017 were $ 1.37 trillion.
The experience before and during the pandemic provides an indication of what we can expect in the future.
According to the Census Bureau’s Income and Program Participation Survey (SIPP), in 2017, 15% of adults (33 million) with at least tertiary education had student loan arrears. before the pandemic (all subsequent SIPP assessments are limited to those with at least secondary education).
But that number was higher for certain groups: 21% of adult black non-Hispanic ethnicities; 23% of unmarried adults; and 29% of adults between the ages of 25 and 34.
Education and debt go hand in hand
Student debt was tied to the level of education or the highest degree someone received.
About one in four adults with advanced degrees, that is, those with higher than a bachelor’s degree, had at least some student debt, compared with fewer than one in five adults with an associate’s or two-year degree.
Those with only a high school diploma had the least student debt. But even this group accumulated debt if they started but did not complete college courses or took vocational training such as trade certificates or licensing.
While those with advanced degrees were more likely to have and have higher student debt, those who graduated from college but did not have a degree found themselves in a particularly difficult double position: they accumulated debt while in college but had not yet been able to extract. benefit from the higher income associated with higher education. higher education.
In 2017, the average annual earnings of those who graduated from college but did not earn a degree were significantly less than those with a bachelor’s degree or higher, making it difficult for them to pay off student debt. And while some may eventually graduate, many will not.
Who is most likely to have student loans?
Racial differences in student debt retention are clear.
Black adults of non-Hispanic origin were particularly likely to have student debt.
For example, in 2017, interest rates for some non-Hispanic black groups were twice as high as for non-Hispanic white adults, and black adults were more likely than white adults at all levels of education to receive student loans.
Overall, women were 28% more likely than men to have student debt.
In 2017, non-Hispanic black women were the most likely to have student loans from any gender group. About 1 in 4 black women of non-Hispanic background had student debt, compared with 1 in 8 white men of non-Hispanic background.
Young people, especially those between the ages of 20 and 30, were disproportionately indebted, and there were also clear racial and ethnic differences in this age group.
Among adults aged 25 to 44, Hispanics were the least likely to have student debt, in part because of the lower likelihood of attending college among Hispanics.
About a third of non-Hispanic black and white adults between the ages of 25 and 34 had student debt.
However, older black people were significantly more likely to continue to be in debt than older whites.
The differences in educational attainment and race were so great that non-Hispanic black adults who went to college but did not receive a degree were about the same likelihood as white non-Hispanic adults who received a degree (21% and 22%, respectively). ), carry student debt.
How much student debt do people have?
Average student debt in December 2017 was the same for non-Hispanic black women and non-Hispanic white women, with each group having approximately $ 20,000.
White women of non-Hispanic background, the largest percentage of college graduates, disbursed about $ 398 billion in student loans in 2017.
Non-Hispanic white males, the second largest group of student debt, owe $ 278 billion in student loans. Black women of non-Hispanic background had $ 110 billion in student debt, and $ 54 billion for Hispanic women.
Adults with at least a bachelor’s degree had student debt of $ 756 billion, according to SIPP.
Student loan debt is associated with an increase in total debt
Many adults who have received student loans have also faced other debt burdens. Of those with student loans, about 23 million (69%) had at least one additional type of debt, such as a credit card, a car, or medical care.
Among those with student loans, credit card debt was the most common additional debt (52% of those with student debt also had credit card debt), followed by car loans (33%) and medical debt. service (18%).
Those who are in arrears in excess of their student loans are also often heavily indebted on student loans.
For example, the average student debt among those without credit card debt was $ 16,000 in 2017. However, those with student and credit card debt owed an average of $ 20,000 in student loans.
COVID-19 Compounds Economic Difficulties
Federal student loans have increased by an additional $ 190 billion since 2017, reaching $ 1.57 trillion in 2020. The onset of the COVID-19 pandemic has created additional levels of economic trouble beyond the existing burden on loans.
Responses to the Census Bureau’s Pilot Household Survey highlight that some groups for whom student debt may pose particular problems are also most affected by the pandemic.
For example, those who have college but do not have a degree are more likely to experience a loss of income from work in their family since the start of the pandemic. They were also more likely to report that they found it very or very difficult to pay for their usual expenses in the previous week than those with at least a bachelor’s degree.
In an effort to reduce the burden of student debt during the pandemic, the government froze payments on federal student loans and interest rates were set to zero.
However, this policy is temporary. Even with high unemployment in the country and no current need to pay off this debt, recent stimulus money has been used to reduce the debt burden.
Although the incentive payments received in January were no more than $ 600 per person, more than three-quarters of the people who received them spent them immediately, and about half said they spent them on paying off a credit card, student loan, or other debt.
Populations most likely to have student debt are even more likely to use January stimulus payments to pay off debt.
For example, women were more likely than men to use incentives to reduce debt. Likewise, over 60% of both non-Hispanic black respondents and Hispanic respondents also used this money to reduce debt, compared with less than 50% of non-Hispanic white respondents.
These results show that despite the freeze on payments, student loan arrears continue to be a heavy burden for many households during the pandemic.
SIPP is the nation’s premier source of income and program participation information. It collects data and measures changes in American economic well-being, family dynamics, education, assets, health insurance, child care, and food security. Information on the methodology and reliability of these estimates can be found in the sources and accuracy statements for each release of SIPP data.
HPS is designed to provide near real-time data on how the coronavirus pandemic has affected people’s lives. Information on the methodology and reliability of these estimates can be found in the sources and accuracy statements for each release of HPS data.
Michael D. King and Lindsay M. Monte are statisticians in Program Participation and Revenue Translation, Bureau of the Census. Neil Bennett is an economist in the Labor Statistics Division of the Census Bureau.