Student debt is on the rise, both in North Carolina and across the nation. More than 45 million Americans now owe a collective $1.6 trillion.¹ 

Once upon a time, North Carolina prided itself on low tuition and low student debt among its graduates.

But as the chart above illustrates, as tuition has risen, debt among North Carolina public college graduates has also risen dramatically – to about what it takes to buy a modest four-door sedan – and is now approaching the national average.

And not only are students borrowing more, but more students are borrowing.

As the chart below demonstrates, the percentage of graduates with debt across the nation has risen from 58% to 69% since 1996.

The trend might seem alarming, but there are also surprising myths and facts about student debt:

• College is still worth it.² The average bachelor’s degree recipient makes about $61,400 a year and owes less than $29,000.³ So the debt is manageable for most graduates.
  
  
• As states have reduced their support for public colleges and universities, the dramatic increase in student debt is linked to increases in tuition. A study by researchers at RTI International and the University of Colorado-Boulder found that for every $1,000 increase in in-state tuition, graduates accumulated $286 more debt over the course of their education.⁴
  
  
• We’ve all heard stories about graduates with crushing, six-figure debt loads. But the fact is that most students who compile more than $100,000 in debt are graduate- and professional-school students – future doctors, lawyers and PhDs who tend to have six-figure incomes to pay off that six-figure debt.
  
  
• Those most likely to default, in fact, tend to have loan balances less than $10,000. In 2017, the median balance carried by someone who defaulted was a little over $9,600.⁵
  
  
• About half of those who defaulted never completed their credential or degree. They incurred college debt, but were less likely to benefit from additional earnings that tend to accompany a degree and help retire that debt.
  
  “The people having problems with their debts are those who dropped out of school after just a few courses or a year,” Susan Dynarski, an economist at the University of Michigan, told NPR. “If you look at the likelihood that someone is going to default, it actually drops as the debt goes up.”⁶
  
  
• African-Americans carry a disproportionate debt burden. The Institute for College Access & Success reports that 85% of black bachelor’s degree recipients took out loans. And they graduated with an average of $34,000 in debt – higher than the average debt of white, Hispanic or Asian graduates.

• For-profit colleges – which are more expensive and have low graduation rates – also account for a disproportionate share of debt. Some 83% of for-profit college graduates have loans. They also tend to borrow more – $39,900, versus an average of $26,900 for graduates of public colleges and $31,440 for graduates of private nonprofit institutions.⁷
  
  While for-profit colleges have only about 10% of students, they account for 52% of defaulters. Students who started at community colleges account for 26%. Dynarski says that for-profit colleges tend to have both high dropout and high default rates.⁸ 
  
  
• Most graduates don’t pay off their loans within 10 years.
  
  Researchers at RTI analyzed data released by the National Center for Education Statistics In 2017 and determined that only 38% of students had paid off all their federal student loans 20 years after beginning college, in part because income-based repayment plans can stretch out the duration of a loan. The average borrower still owed half of what he or she originally borrowed, or about $20,000.⁹
  
  
• Student debt affects family formation. 
  
  The researchers in the RTI-Colorado study found that for every $5,000 borrowed, the borrower was 7.8% less likely to have been married four years after graduation. 
  
  The same study found that for every $5,000 borrowed, female graduates were 5% less likely to have a child four years after graduation.¹⁰
  
  
• Student debt may cause some young people to put off buying a home. Research on this topic finds that the impact of debt on home purchases varies depending on whether the buyer earned a credential.
  
  Researchers at the Federal Reserve found this year that home ownership among those ages 24-32 fell from 45% in 2005 to 36% in 2014. The authors estimated that 20% of the decline can be attributed to increased student loan debt – meaning 400,000 borrowers who could have owned a home by 2014 didn’t because of student debt.¹¹
  
  The researchers in the RTI-Colorado study, however, found no significant relationship between student debt and home ownership. They suggest that the difference might be explained by the fact that their study included only graduates with bachelor’s degrees, rather than both completers and non-completers who took on debt.¹²

Student debt is a fact of life for millions of former students. And while average debt levels are rising, they are manageable for most. But it’s also true that debt affects graduates’ lives in both subtle and not-so-subtle ways.

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¹https://www.npr.org/2019/07/09/738985632/these-are-the-people-struggling-the-most-to-pay-back-student-loans.
²https://medium.com/@aplupublicaffairs.com/is-college-worth-it-for-students-and-society-the-answer-is-a-resounding-yes-82c4d886c472
³https://www.washingtonpost.com/outlook/five-myths/five-myths-about-student-debt/2019/05/24/3543bca4-7d81-11e9-a5b3-34f3edf1351e_story.html.
⁴https://doi.org/10.1080/09645292.2018.1541167.
⁵https://www.washingtonpost.com/outlook/five-myths/five-myths-about-student-debt/2019/05/24/3543bca4-7d81-11e9-a5b3-34f3edf1351e_story.html.
⁶https://www.npr.org/2019/07/09/738985632/these-are-the-people-struggling-the-most-to-pay-back-student-loans.
⁷https://ticas.org/wp-content/uploads/legacy-files/pub_files/qf_about_student_debt.pdf.
⁸https://www.npr.org/2019/07/09/738985632/these-are-the-people-struggling-the-most-to-pay-back-student-loans.
⁹https://www.rti.org/insights/20-years-student-loans.
¹⁰https://doi.org/10.1080/09645292.2018.1541167.
¹¹https://www.bloomberg.com/news/articles/2019-01-16/high-student-debt-is-driving-low-millennial-homeownership-rates; https://www.wsj.com/articles/fed-says-student-debt-is-u-s-hurting-housing-market-11547657473. 
¹²https://doi.org/10.1080/09645292.2018.1541167.