Repayment of Federal Student Loans Over Time

This blog post represents the seventh in our series on student loan debt. All previous blog posts can be found on our primary website. In our previous blog post, we started looking at trends in student loan repayment of beginning balances. Using the US Department of Education’s College Scorecard data, we found that the average balance owed at each of the four checkpoints in the Scorecard data was 97.6% in Year 1, 89.5% in Year 5, 64.9% in Year 10, and 40.6% in Year 20. One of the observations from these data was that repayment of student loans may differ based on institutional type and demographic characteristics. We explore these differences further in this blog post.

Relationship between Loan Repayment Rate and Percentage of Underserved Students

In the visualizations below, we have repayment rates disaggregated by the percentage of students who identify as either Black/African American or Hispanic/Latino. We refer to this group as Underrepresented Minority (URM) students. Campuses are grouped into quartiles based on the percentage of URM students in the undergraduate population. Texas public four-year universities are highlighted with their name abbreviation and color associated with university system membership. The three tabs at the top of the visualization show data for checkpoints at 5, 10, and 20 years after students leave an institution.

  • The primary takeaway from the URM-segmented data is that institutions with higher URM percentages have borrowers carrying higher average balances over time. 
  • Looking at the first chart, you can see that almost all of the institutions in the highest URM quartile to the far-right have repayment averages exceeding 100% at Year 5. This means that the average student from these institutions owes more in student loan balances after 5 years than they did when they left school.
  • A large proportion of institutions in the third quartile (50%-75% URM) are at or above 100% in Year 5, with a smaller portion of the second quartile above 100%.
  • In Year 10, most institutions have percentages that are lower than in Year 5. However, there are still a number of institutions in the top two quartiles (50% URM and higher) that are at the 100% or above mark.
  • In Year 20, the median percentage for the highest URM institutional quartile (75%-100%) is still above 75%. This indicates that half of the institutions in the highest quartile have students who still owe at least 79% of the original student loan balance after 20 years since leaving the institution. For the other three quartiles, the median percentage owed is below the 50% mark.

NOTE: Due to the volume of information in each visualization below, we recommend that you click the “Full Screen” button in the bottom-right corner to enhance viewing of the data. Also, clicking in the “Select System” box at the far-right will allow you to highlight all of the institutions within one of the public university systems in Texas.

So What?

As the industry of higher education continues to press forward in addressing concerns around diversity, equity, and inclusion, the data related to repayment of student loan balances show that students from institutions with higher levels of underrepresented minorities on campus tend to struggle to repay student loan debt. The delta between the median percentage owed in Year 5 for the first quartile with the lowest percentage of URM students (87.3%) and fourth quartile with the highest percentage of URM students (125.6%) is 38 percentage points. The difference between the median for the first quartile (35.7%) and fourth quartile (79%) actually increased to over 43 percentage points in Year 20. This means that the gap between these groups is growing over time, as opposed to shrinking. Given the status of these gaps, the ability to repay student loans is one factor that needs to be included in multi-faceted conversations about college access and affordability.