The amounts individual students borrow to fund their education depend on their circumstances. The longer students stay in school, the more they are likely to borrow. So, 8 percent of 2011-12 associate degree recipients borrowed $30,000 or more. Among bachelor’s degree recipients, 29 percent borrowed this much. And more than three-quarters of graduate degree recipients borrowed this much.

Debt levels also vary across types of institutions. Students who enroll in for-profit institutions borrow more than similar students attending public and private nonprofit colleges and universities.

Family income also matters. Among 2011-12 bachelor’s degree recipients, about 40 percent of those from the top half of the family income distribution graduated without debt, compared with about 20 percent of those from the bottom half. Those from families in the top quarter of the income distribution were less likely than others to borrow $30,000 or more, but there was no significant difference across the rest of the income distribution in the share of graduates borrowing this much.

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Because students borrow much more for graduate school than for their undergraduate studies, much of the outstanding student debt is owed by people with relatively high incomes. In 2013, 47 percent of the outstanding student debt was held by households in the top quarter of the income distribution and only 11 percent was held by those in the lowest income quartile. This is not about the family backgrounds of these borrowers, but about where they ended up after they completed their education.

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Borrowers can repay their federal student loans through an income-driven system that limits monthly payments to an affordable share of income and forgives unpaid debt after 10, 20, or 25 years of payments. But too many options and bureaucratic hurdles prevent many people from taking advantage of this policy. Other countries, including Australia, automatically enroll borrowers in such a program, making it very difficult for them to default. The United States could implement a similar policy, in addition to improving the details of the program so it works better for both borrowers and taxpayers.

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