College & Workforce Readiness

Analysts Look at Impact of Student Debt in Long-Term

By Caralee J. Adams — August 16, 2012 2 min read
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Student advocates and analysts are looking closely at the fallout of college debt. What they are finding may influence the attitude that families will have taking out loans.

The Young Invincibles, the Washington-based group that champions causes of concern for young people, released a report Wednesday that examines the impact of student-loan debt on buying a house.

It concludes that typical single student borrowers who want to buy homes would need to spend about half their monthly income on mortgage, student-loan, credit-card, and car payments—leaving them unqualified for many home loans. Also, couples, especially when both partners have college debt, face significant hurdles in buying real estate.

In response, borrowers may put off buying until they whittle down their debt, save for larger down payments, or consider less expensive housing options.

Despite the long-term consequences of student-loan debt, families continue to be willing to borrow for college—but there is growing frustration and skepticism over the cost. A national survey last month of 3,000 Americans found 57 percent of adults thought college was a good investment, compared with 81 percent in 2008.

The survey by Country Financial and analyzed by Rasmussen Reports also reflects an increasing concern over debt accrued for higher education. This year’s report shows having $20,000 in student-loan debt was seen by 42 percent of respondents to be too high, while last year only 31 percent thought it was too much.

Yet research has illustrated the long-term financial advantage of having a college degree and the growing demand for jobs that require advanced education.

Financial-aid expert Mark Kantrowitz published a paper earlier this month about students who graduate from college with six-figure debt. While the average debt for college graduates is about $25,000, those getting advanced degrees are the ones borrowing the most. Kantrowitz, publisher of and, reports that about 36 percent of law school graduates and 49 percent of medical school graduates graduated with more than $100,000 in loans.

Going to a for-profit college increases the chance of being in deep debt. Nearly three-quarters of undergraduates finishing with six-figure student-loan debt come out of nonprofit colleges, while 24 percent are graduates of public colleges.

Higher debt is also linked with students who take out private student loans, according to Kantrowitz.

Among his recommendations to address the problem is better monitoring on statistics on student debt by the federal government and requiring more disclosure in the loan-repayment process.

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A version of this news article first appeared in the College Bound blog.