The Daily Caller

The Daily Caller

Report: Student loan debt nearly one-quarter of income for low income households

Households with incomes in the bottom fifth have outstanding student loan debt equal to nearly a quarter of their earnings, according to the Pew Research Center.

Student loan debt has been on the rise for many American households since 2007, in particularly the lowest income households — those making about $21,000 and less.

Five years ago, the households in the lowest income quintile had outstanding student loan debts equal to 15 percent of their income. That number increased to 24 percent by 2010 — a 9 percentage point increase.

In 2010, low income households also owed 13 percent of the total outstanding student loan debt, up from 11 percent in 2007.

“[T]he relative burden of student loan debt is greatest for households in the bottom fifth of the income spectrum, even though members of such households are less likely than those in other groups to attend college in the first place,” according to Pew.

“Because outstanding student debt has been rising and household incomes have been falling since 2007, outstanding educational debt has risen as a share of household income for all income groups considered,” Pew notes.

Student loan debt has also impacted households in the wealthiest quintile — those making roughly $97,500 and higher — with their share of outstanding student loan debt being 31 percent in 2010. In 2007, the wealthiest quintile owed 28 percent.

“The outstanding student-debt-to-income ratio nearly doubled for the richest fifth of households from 2007 to 2010,” according to Pew, “but it remains the case that in both years the ratio of student debt to income was markedly higher for the lowest fifth of households by income.”

The report also notes that nearly one out of five U.S. households have outstanding student loan debt, with most heavily impacted being households headed by someone age 35 and younger — 40 percent of these households have outstanding student loans.

In 2007, 15 percent of households had outstanding student loan debt, and now that number has grown to 19 percent of households.

The average amount of outstanding student debt has grown as well, from $23,349 in 2007 to $26,682 in 2010.

“Most debtor households had less than $50,000 in outstanding student debt in 2010, but the share of households owing elevated amounts has increased,” according to Pew.

In 2007, 10 percent of those with student debt owed more than $54,000, and by 2010 that 10 percent of student debtor households owed more than $61,000.

While average household indebtedness has fallen from roughly $105,300 in 2007 to more than $100,700 in 2010, the decline in total indebtedness has not been experienced by all households.

Average indebtedness of the lowest income households rose from more than $17,500 to more than $26,700 in 2010.

“The lowest income households have mounting debt obligations in addition to mounting student debt obligations, while the nation’s higher income households have declining other debts in the face of mounting student debt obligations,” according to Pew.

Follow Michael on Twitter

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.