1 Center for American Progress | Resetting the Trillion-Dollar Student-Loan Debt Problem
Resetting the Trillion-Dollar Student-Loan Debt Problem
By David A. Bergeron, Elizabeth Baylor, and Joe Valenti November 21, 2013
In ever-increasing numbers, sudens enrolled in our naion’s colleges and universi-ies are borrowing o mee educaional expenses. As college coss rise, so oo does he amoun each suden is borrowing. While ederal suden loans can be consolidaed, hese and privae loans canno be reﬁnanced. I reﬁnancing o suden loans were avail-able, borrowers could see signiﬁcanly reduced monhly paymens; lendersincluding he ederal governmencould see increased repaymen raes; and we all could see more economic aciviy, as a porion o each suden-loan borrower’s income could be spen in oher secors o he economy or saved or larger purchases. In his issue brie, we review a number o proposals pending beore Congress and recommend a number o elemens ha need o be included in a plan o permi suden-loan reﬁnancing.
Student-loan debt in America
Our higher-educaion ﬁnancing sysem has become increasingly dependen on deb. Daa rom he Deparmen o Educaion illus-rae he precipious growh o deb over recen years. In he 2011-12 academic year, 40 percen o undergraduaes borrowed under ederal suden-loan programsan increase o 18 percen since 2004 and 15 percen since 2008. More roubling is he ac ha among hose bor-rowing, he average amoun borrowed in 2012 was nearly $7,800, up 44 percen rom he 2004 amoun o $5,400 and up 26 percen rom he 2008 amoun o $6,200.
(see Figure 1) Tese ﬁgures represen jus one year o borrowing; oal borrowing levels or degree comple-ion are likely o be subsanially higher.
Federal student-loan borrowing in 2004, 2008, and 2012
Source: Center for American Progress analysis of 2003-04, 2007-08, and 2011-12 National Postsecondary Student Aid Studies. See National Center for Education Statistics,
National Postsecondary Student Aid Study
(U.S. Department of Education, 2013).
Average amount borrowed2004 2008 201240%35%34%Share of borrowing$5,401$6,201$7,796