Profiles of former students struggling to repay their education debt are compelling. Too many students enroll in college but leave school without completing a credential, making even small amounts of debt burdensome. Some students complete their programs only to discover that because of either the institutions they attended or the fields in which they earned their degrees, they can’t find jobs that reward their education. And when the overall unemployment rate is high, even graduates with a good education can struggle to find a well-paying job.
But these problems do not mean that most student loan borrowers are less well off than those without student debt—many of whom never went to college. In fact, most outstanding student debt is held by people with relatively high incomes.
According to the recently released Survey of Consumer Finances for 2016, households in the top quartile of the income distribution, with incomes above $81,140 in 2016, held about half of all outstanding education debt. The top 10 percent of households, with incomes of $144,720 or higher, held 24 percent of the debt. This debt represents a combination of students borrowing for their own education and parents or grandparents borrowing to help their children or grandchildren pay for college. Some of the loans supported students who are still in school, but other loans were taken out years ago.