Smart Borrower Blog

Student Loan Borrowers Struggle to Pay Down Principal

Oct 20th, 2017 @ 1:38 PM by Amber Nelson

Roughly a decade after borrowing money for student loans, 2 out of 5 American borrowers have not made any progress on repaying their debt, according to new data from the Department of Education.

The study tracked loans made to U.S. college students in the 2003-2004 academic year and found that repayment rates varied by what type of degree borrowers achieved as well as how much money they borrowed.

Not surprisingly, 44% of those who did not finish their degree have not paid off a single dollar in principal on their loans as of 2015. What is surprising is that more (45%) of those who earned an Associate’s degree have still not paid off any principal on their loans. Predictably, those rates were lowest (28%) among those who had completed their Bachelor’s degree or graduate degrees as their incomes are generally much higher upon leaving school.

For those who earned undergraduate certificates, the median amount of student loans owed 12 years later was $3,700, while those who attained associate degrees still owe a median of $13,800. The median for those who earned bachelor’s degrees or higher was slightly less at $11,700. Those who borrowed for both undergraduate and graduate degrees owed a median of $48,000 as of 2015.

The amount of money borrowed was also a huge factor in how much former students have repaid. Among those who took out student loans for less than $5,000, 63 percent have paid off their loans in full whereas only 19% haven’t paid off any principal at all. For those who borrowed more than $50,000, just 5% have completely paid off their loans and almost three-quarters (72%) have not paid down even a dollar on their principal. While the typical borrower with more than $50,000 in loans went to a graduate school and is likely to have a high salary after graduation, the fact that the majority have not even paid down own dollar in principal after 10 years is a reason for concern.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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