What Everyone's Getting Wrong About Student Loans

Summary

This video challenges common misconceptions about student loans, revealing that the average student debt isn't as high as people think due to grad school loans inflating numbers. It also highlights that 40% of people with student loans never graduate, disproportionately affecting underprivileged groups. The dropout crisis is often overlooked, and the financial pressures and lack of preparation contribute to this issue. The video calls for a systemic solution that not only addresses student loan forgiveness but also supports students through better resources and guidance to avoid costly mistakes and increase graduation rates.

Takeaways

• 😀 There is a common misconception that the average college graduate has $39,000 in student debt, but this figure is skewed by graduate students and those who have been paying down their loans.
• 😀 35% of college graduates don’t have any student loans, which is a significant portion of the population.
• 😀 The average student debt holder’s balance is $39,000, but this is typically after years of repayments, not what they graduate with.
• 😀 The actual average student debt for a recent graduate is around $28,000, which is lower than the $39,000 figure commonly cited.
• 😀 Graduate school loans and professional degrees (e.g., law, medicine) significantly impact the overall student loan average.
• 😀 People who take out more student loans tend to be less likely to default on their loans, which is counterintuitive to popular belief.
• 😀 Surprisingly, people who borrow more money are often more responsible about paying it back, particularly in fields like law and medicine.
• 😀 40% of people with student loans do not graduate with a degree, which is a critical issue that’s often overlooked.
• 😀 The students most likely to drop out are often from marginalized groups, including Black, Hispanic, and first-generation students.
• 😀 Financial pressure, lost income, and academic struggles are major reasons why students drop out without a degree.
• 😀 To truly address the student loan crisis, it is essential to not only consider debt forgiveness but also tackle the dropout rate by offering better early-stage support for at-risk students.

Q & A

What is the current total amount of student loan debt in the United States?

The total amount of student loan debt in the United States is 1.75 trillion dollars.

What is the average amount of student debt per student in America?

The average amount of student debt per student in America is approximately 39 thousand dollars.

What percentage of people with a degree do not have student loans?

Around 35% of people with a degree do not have student loans.

Why do most people incorrectly assume the average graduate has 39 thousand dollars in student debt?

Most people assume the average graduate has 39 thousand dollars in student debt because they don't account for those who have been paying down their debt or haven't graduated yet, and they also overlook those who may not have student loans at all.

What is the actual average student debt for graduates of four-year universities?

The actual average student debt for graduates of four-year universities is about 28 thousand dollars.

What role does graduate school play in the higher average student debt figure?

Graduate school contributes significantly to the higher average student debt figure, as people who attend graduate school tend to take out larger loans.

What surprising trend is observed regarding students who take out more loans?

A surprising trend is that students who take out more student loans are actually less likely to default on those loans.

What is the connection between student loan debt and the likelihood of default?

The connection is that students who take out more loans are typically more committed to repaying them, often because they come from more financially stable backgrounds or have more resources to manage the debt.

Why do some students end up with student loans but no degree?

Many students end up with student loans but no degree due to financial pressure, academic challenges, and other factors like being first-generation students or coming from low-income backgrounds.

What is the dropout rate among students with student loans, and how does it impact them?

Around 40% of people with student loans drop out without earning a degree, and this results in financial strain, with those students carrying an average debt of around 13 thousand dollars without a degree.