Answer: Under $5,000

Questions:

• Did this answer surprise you? Why or why not?
• Why do you think that almost 1 in 4 borrowers with less than $5,000 in student debt default?
• What do you think is another critical factor in determining whether someone can repay their student debt? 

Click here for the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (from Pew Trust): 

Throughout the panel discussions, experts indicated that policymakers and the public may be surprised to learn which borrowers default on their loans more often. Borrowers with the highest balances do not necessarily have the most trouble repaying. This may be in part because some used their loans to obtain advanced degrees, resulting in high earnings after graduation. Instead, borrowers with lower incomes and volatile finances, who may also struggle with other bills, and those who owe the least, often because they did not graduate, may be at particularly high risk. For example, among borrowers who started repaying in 2011, 24 percent with loan balances under $5,000 had defaulted within three years, compared with 7 percent of those with over $40,000 in debt.

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Check out all the NGPF resources in our Paying for College Unit. 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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