A new Brookings Institution report on student loan debt is causing quite a stir. It says the student loan crisis we’ve heard so much about may not be as bad as we think.
The findings are so startling, even co-author Matthew Chingos didn’t believe them at first.
“My first reaction when we ran these data was, this has to be wrong,” he says.
But Chingos re-checked the data until he was satisfied with his conclusions. Among them: monthly student loan payments have stayed at three to four percent of a borrower’s monthly income, since 1992. Chingos also says, in 2010, only two percent of young households owed more than $100,000.
“There don’t seem to be more of those than there used to be,” he says. “If anything there are less.”
But Chingos says more people have student loans. Because more students are going to college. The people he really worries about? Those who never got their degree. People like Rhonda Wanzer, who at 48, has a good job with the federal government, but no college degree. She still owes about $28,000.
“I’m trying to devise a plan where I can pay it off at least before I can retire retire,” she says. “I can retire in about 15, 20 years.”
Chingos insists Wanzer isn’t typical. He says most student loan borrowers do finish college, and eventually pay off their loans.
His study has its critics who say his data — which is from the Federal Reserve — is too limited, doesn’t count everyone, and is old.
Chingos says the Fed data is the best there is for this kind of research. And he’ll take a close look at new data when it comes out in the next six months or so.
Other researchers, using Education Department data, agree with Chingos’s conclusions.
Sandy Baum, a senior fellow at the Urban Institute, says the real culprit here is high college tuitions.
“Tuition has certainly gone up rapidly, and particularly, in recent years, in public colleges and universities, ” she explains.
Chingos says soaring tuition is the disease. And student loans are just the symptom.