Twenty to Life: Higher Education Turning Into Multi-Decade Debt Sentence

MADISON, Wis. — The explosion in student loan debt has caused borrowers across the nation to spend an average of more than 20 years to pay off their higher education debt according to a study of 61,000 respondents in 2013 conducted by One Wisconsin Institute, a member of the national ProgressNow Education Network.

“A college education is supposed to be a path to the middle class, not a sentence to decades of debt. But, based on our original research, that is exactly what the fallout is from the trillion dollar plus student loan debt crisis,” commented One Wisconsin Institute Executive Director Scot Ross.

According to the Institute’s research, the average length of repayment for all those reporting student loan debt is 21.1 years. For those individuals with some college but no degree, the average repayment term was 17.2 years, associate degrees reported 18.3 years, bachelor degrees 19.7 years and graduate degrees clocked in at 23 years.

The research is based on responses to a nationwide survey sent to a network of not-for-profit organizations. Over 61,000 individuals completed the detailed survey of their personal finances including their income and levels of educational attainment, whether they ever had a student loan or were currently paying one off and the length of their repayment terms.

The comprehensive financial survey of over 61,000 Americans revealed significant length of repayment terms and resulting impacts on economic activity:

• An average length of repayment for all those reporting student loan debt of 21 years, ranging from 17 years for those with some college but no degree up to 23 year for debtors with graduate degrees;
• Rates of home ownership were 36% lower among individuals still paying on student loans versus those who have already paid off a loan across all income levels;
• For individuals reporting solid middle class incomes of $50,000 to $75,000, those still paying off their student loans report home ownership rates 28% lower than those in the same income range who have already paid off their loans. In the $75,000 to $100,000 income range loan payers home ownership rates were 25% lower non-payers;
• Across all income levels, individuals who have paid off their student loan are more likely to have purchased a new versus used vehicle in the last 10 years;
• For those currently repaying a student loan, over 63% purchased a used vehicle instead of a new vehicle;
• In a household with a family member repaying a student loan the last vehicle purchased was used for over 71%, versus new for just over 28%;
• The survey data suggests an aggregate impact of $6.4 billion in reduced new vehicle sales annually.

More than 40 million borrowers currently endure total student loan debt topping $1.2 trillion. It is the second largest form of consumer debt, exceeding credit card and auto loan debt and exceeded only by home mortgage debt. Rapidly increasing school tuition coupled with flat or declining public funding for university systems and stagnant financial aid means that increasingly, families and students are forced to take out more and bigger loans to pay for their schooling.

“The status quo, with more than 40 million Americans saddled with over one trillion dollars in student loan debt is not working. Students and their families are doing the right thing, working hard and taking responsibility to pay for their higher education. We need to make sure their efforts to get an education help them to become productive citizens, not multi-decade debtors,” concluded Ross.

One Wisconsin Institute is a 501(c)(3) statewide research and education organization of 80,000 online supporters that utilizes research, communications, rapid response and online organizing to achieve its vision for a Wisconsin with equal economic opportunity for all. The Institute’s research and staff have appeared in thousands of media articles at the national, state and local levels, including The Rachel Maddow Show, The Ed Show, Melissa Harris-Perry, The Reid Report, National Public Radio, The Thom Hartmann Program, The New York Times, USAToday and The Washington Post.

ProgressNow Education is a national network of 23 state-based 501(c)(3) organizations improving communications strategy and delivery in the progressive movement. ProgressNow Education has state partners who are experts in research and communication issue campaigns in California, Colorado, Florida, Idaho, Iowa, Georgia, Massachusetts, Michigan, Missouri, Minnesota, North Carolina, Nebraska, New Hampshire, New Mexico, Nevada, Ohio, Pennsylvania, Texas, Utah, Virginia, Washington, Wisconsin and Wyoming.