This Just In: The More Student Loan Debt You Get, The More Likely It Is You'll Be Able To Pay It Off

Mo' debt, less problems. Wait, what?

This is weird: it turns out that people who take on the highest amounts of college debt are also the most likely to successfully pay off their loans.

This update comes from a blog post for the Brookings Institution titled "Why students with the smallest debts have the larger problem" by Susan Dynarski, an economics professor at the University of Michigan.



Dynarski's research found that students with the lowest amounts of debt were also the least likely to be able to pay back their student loans, whereas students with the highest amounts of debt were most likely to be able to pay them back.

Here's what the numbers look like:

Dynarski/Brookings Insitution

student debt

The reason? Students with very small amounts of debt (like $1,000-$5,000) were more likely to have dropped out early, before they had the chance to complete their degree, which often results in them taking lower-paying jobs. Students with extremely high debt (like more than $100,000), on the other hand, were likely to have gotten an advanced degree, which has been found to lead to a higher income. For example, this group would include anyone who pays an insanely high amount of money to become a doctor or a lawyer.

America's total amount of student loan debt recently hit $1.2 trillion, with 40 million Americans carrying some form of student loan debt. They're notoriously difficult to pay off, and carrying large amounts of debt can cause some serious anxiety.

In some other countries, like England and Australia, all graduates have the option of making income-based repayments (payments that are a set percentage of your income) as an alternative to defaulting. Dynarski thinks the U.S. should do the same thing if we want people to be able to successfully pay off their student debt without killing the economy. We're with you all the way, Dynarski.

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