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The “Manageable” Debt Load of Recent Graduates


An August 11th article in The New York Times caught my attention.  Written by Tamar Lewin, the article describes a policy brief released by the College Board which concludes that for the most part, recent graduates are carrying “manageable” debt loads.  Using data published in the Department of Education’s National Postsecondary Student Aid Study, the policy brief notes that while the number of students using loans to pay for their post-secondary educations has increased in the last five years, the volume of students who carry overly burdensome levels of debt upon graduation remains small in comparison.

According to the policy brief, of the students who earned a degree or certificate program during the 2007-2008 academic year, some 41 percent graduated with no debt whatsoever.  Those students borrowing more than $40,000 to pay for their educations represented only six percent of total student borrowing.  Students borrowing money to pay for a certificate program carried substantially less debt overall than those borrowing money to pay for an associate or bachelors degree.  A meager one percent of those borrowing money for a certificate program found themselves $40,000 or more in debt upon graduation while ten percent of those borrowing to complete a bachelors degree carried that level of debt or more upon graduation.  The above statistics found in the College Board’s policy brief are logical when one considers the number of credits required to complete each of the three degree types compared above.  What’s not logical is the $40,000 threshold selected to evaluate reasonable debt loads.  Obtaining a $40,000 loan for a certificate program is almost certain to lead to a negative ROI unless the certificate is related to technical training in an extremely high paying profession.  Even then, it is a risky venture.  While borrowing $40,000 for a four year degree sounds better, it may not be relative to the average loan balance of graduating students.  The College Board briefing does not take into account the students who borrow money to attend college who don’t graduate at all, or the students who attend college until their money runs out.  Using limited outcomes with a broad brush to stimulate policy discussions can be misleading.  With approximately half of college freshmen graduating in six years, we shouldn’t ignore the half that don’t finish.

Lewin points out in her article that “over all, for all kinds of degrees and settings, the median student loan debt of borrowers in 2007-08 was $15,123, up 11 percent from…2003-04.”  There are many who argue that even this amount of student debt is too much.  It seems ironic that today’s students seem to realize the importance of a college education as evidenced by increasing enrollments nationwide yet are often hindered in their efforts by the daunting costs.  A later article in the September 4th issue of The Wall Street Journal cites evidence of the government’s National Postsecondary Student Aid Study (NPSAS) that two-thirds of college students borrow money for college while only 12 years ago, just over half of all college students borrowed money to fund their educations with the average amount borrowed significantly less ($13,172) than it is today ($23,186 according to the article).

An article published in The Chronicle of Higher Education on the same day the New York Times article appeared takes a different view on the data presented in the report.  The author, Beckie Supiano, writes of the increasing level of student debt over the last five years rather than focusing on the 41 percent who manage to graduate with no student debt.  Supiano also points out in her article that the data does not account for PLUS parent loans, loans to students from family members or friends, or credit card debt accumulated from paying college tuition.  College students and recent graduates are carrying more credit card debt than their counterparts who graduated only four years ago.  According to a recent study conducted by Sallie Mae, today’s graduates leave college with 41 percent more credit card debt than those who graduated only four years ago with one in five owing at least $7,000 in credit card debt upon graduation.  Only 20 percent of students with credit card debt reported paying off their balances every month.  Considering the increasing levels of credit card debt among today’s college students and recent graduates, taking such debt into consideration may dramatically change the report’s conclusions. 

While the College Board appears to find these results reassuring, there are several elements of the big picture that should be given consideration.  First, “manageable” is a relative term.  What may be “manageable” for one individual may not be for another.  While there is obvious value in identifying trends in the higher education industry, we must be careful to realize that individual cases matter.  As the report states, there are still at least ten percent of the 2008 graduating class who are carrying $40,000 or more in student debt.  When the National Center for Public Policy in Higher Education issues its annual Measuring Up report, it reports college affordability data by income quintile since earnings above or below these thresholds can be quite influential over the ability of a student to attend college.  Given the fact that students from the higher income quintile groups have a higher college completion rate, the College Board’s usage of data from graduates only doesn’t reflect the overall picture.

Additionally, in today’s turbulent economic conditions, job prospects for recent college graduates are limited.  Factor in jobs that pay a “good” salary and the options shrink that much more.  As I discussed in an article earlier this summer, recent college graduates are struggling to find relevant jobs, much less one that pays them a salary high enough to live and pay off their student loans in a timely manner.  A May 9 article in The Wall Street Journal predicted that “even those who land jobs will likely suffer lower wages for a decade or more compared to those lucky enough to graduate in better times.”  As The Wall Street Journal article of September 4th points out, many recent college graduates are so economically strapped by student debt upon graduation that they are beginning to delay significant milestones in their lives including getting married, buying houses, and having children.  The article notes that a 2006 survey conducted by Mathew Greenwald & Associates, Inc. found that of 1,508 college graduates under the age of 35, 39 percent believe that it will take them more than ten years to pay off their household’s education-related debt. 

Lastly, the College Board  analysis  does not differentiate between full-time students and part-time students.  Attending part-time not only allows a student to maintain some form of employment while in school, it also may be a method used to avoid incurring significant student debt.  The Associated Press (AP) published an article on August 28th that outlines President Obama’s plan to boost Pell Grants in an attempt to not only increase access to college opportunities but to provide greater affordability for low-income students.  The plan would “ensure lower interest rates for need-based college loans” and “provide more college aid to veterans.”  Pell Grants are funds that a recipient is not required to pay back.  Even with President Obama’s stated goals for the Pell Grant system, however, many question whether the initiative goes far enough in addressing the economic burdens of attending college.  For example, as the AP article describes, “the maximum Pell Grant last year was $4,731” while “public college tuition and fees were $6,585.”  It is important to note that not every Pell Grant recipient receives the maximum amount and even if he or she is so lucky, there remains a shortfall of nearly $2,000 still needed to attend even a public college.  Additionally, there are no caps on tuition increases in the Federal Financial Aid system similar to the Medicare and Medicaid systems in healthcare.  Increasing Pell Grants may not make any headway if colleges continue to increase tuitions at rates higher than the earnings of the average family.

 The College Board data does not reassure me that today’s students are not carrying as much debt as many previously thought. There are conflicting sources of data that make it appear that the College Board’s policy piece is not representative of the entire college continuum.  I think the nation’s policymakers would be better off commissioning a consumer survey to see what the debt expectations are of our graduating high school seniors and their families and then comparing that data to the various sectors (fulltime, part-time, etc.).  The enrollment shift that appears to be occurring this fall and may well continue into the spring semester and next year may prove that the student consumers have become more educated than the organizations who study them.



Wally Boston Dr. Wallace E. Boston was appointed President and Chief Executive Officer of American Public University System (APUS) and its parent company, American Public Education, Inc. (APEI) in July 2004. He joined APUS as its Executive Vice President and Chief Financial Officer in 2002. In September 2019, Dr. Boston retired as CEO of APEI and retired as APUS President in August 2020. Dr. Boston guided APUS through its successful initial accreditation with the Higher Learning Commission of the North Central Association in 2006 and ten-year reaccreditation in 2011. In November 2007, he led APEI to an initial public offering on the NASDAQ Exchange. For four years from 2009 through 2012, APEI was ranked in Forbes' Top 10 list of America's Best Small Public Companies. During his tenure as president, APUS grew to over 85,000 students, 200 degree and certificate programs, and approximately 100,000 alumni. While serving as APEI CEO and APUS President, Dr. Boston was a board member of APEI, APUS, Hondros College of Nursing, and Fidelis, Inc. Dr. Boston continues to serve as a member of the Board of Advisors of the National Institute for Learning Outcomes Assessment (NILOA), a member of the Board of Overseers of the University of Pennsylvania’s Graduate School of Education, and as a member of the board of New Horizons Worldwide. He has authored and co-authored papers on the topic of online post-secondary student retention, and is a frequent speaker on the impact of technology on higher education. Dr. Boston is a past Treasurer of the Board of Trustees of the McDonogh School, a private K-12 school in Baltimore. In his career prior to APEI and APUS, Dr. Boston served as either CFO, COO, or CEO of Meridian Healthcare, Manor Healthcare, Neighborcare Pharmacies, and Sun Healthcare Group. Dr. Boston is a Certified Public Accountant, Certified Management Accountant, and Chartered Global Management Accountant. He earned an A.B. degree in History from Duke University, an MBA in Marketing and Accounting from Tulane University’s Freeman School of Business Administration, and a Doctorate in Higher Education Management from the University of Pennsylvania’s Graduate School of Education. In 2008, the Board of Trustees of APUS awarded him a Doctorate in Business Administration, honoris causa, and, in April 2017, also bestowed him with the title President Emeritus. In August 2020, the Board of Trustees of APUS appointed him Trustee Emeritus. In November 2020, the Board of Trustees announced that the APUS School of Business would be renamed the Dr. Wallace E Boston School of Business in recognition of Dr. Boston's service to the university. Dr. Boston lives with his family in Austin, Texas.


  1. As a minority student pursuing a doctoral degree in administration in higher education, college access and affordability are two major topics of interest to me. I applaud you for the thorough analysis of the articles mentioned. However, as one who was looking for a solution, I was left empty. What are we as a nation doing to help students who can not afford to attend college get access and graduate without debt whether manageable or not? Knowing fully well that a college degree gives the key to the middle class to individuals in the minority group, there should be plans to help pay for those who desire a better life. I believe strongly that the students who are graduating with large debts are those who belong to the groups that can not afford to pay for it. These individuals, though committed to a better life, will remain in poverty even after receiving the key- the degree. I will continue to read your blog because I like the way you have analyze issues relating to higher education with the hope that very soon to read a posting that will offer solutions to this very important issue. Please direct me to any posting that may be of benefit to me.

  2. Sir:
    I’ve read your article with interest concerning student debt. As a full time working father trying to better my abilities and career while caring for my wife and 2 daughters, paying for college has been daunting. My wife has worked part-time and is also in college and she shall start full-time college courses at a California State University in January, 2010. I will wrap up my BA degree and APU and placing my MA on hold until she has graduated and is employed.
    I have been lucky enough to finance my own education without incurring debt, beyond cutting any extraneous costs from the family budget and foregoing any but the most glaring repairs required on our home (I’m a do-it -yourself type, so the cost is in materials and the transaction costs of my time on the house against my time on another project). I have also been very fortunate that the agency I work for has paid for roughly one quarter to one third of my classes through a educational grant program or a career enhancement grant. Lastly, my parents gifted the monies required for my last two classes and my graduation application, as our family exchequer was played out.
    I, however, work with college graduates who have incurred a great deal of debt in their attempt to better their education, careers or prospects thereof, and their lives as a whole. As referenced in your article, many have mentioned the fact that their “American Dream” is indeed on hold due to the debt load or that they are unable to continue studies as they can non longer afford to do so.
    My hope, and my wife’s, is that we may pay her education as required without debt and then finace our daughters college education without them incurring debt, and without our mortgaging our futures or retirements. We may be able to do so- many cannot.
    It would seem to me that we in the United States should be able to form some kind of a ‘National Service’ that would allow college graduates to in the various disciplines to work, teach, research where needed within the United States for a term of 2-3 years and then be free of debt. The nation and the students would be well served.
    Please do not confer this with under paid, ill cared for cadres without a clear direction and an ill formed endstate. What I envision would be a non-military parallel in which the former student recieves some form of renumeration, decent housing and healthcare (roughly like the old CCC program or WPA)while giving back to the country. Thus the country receives a valuable product of the students education and time and the student receives experience in their educational field and is able to continue forth debt free once the agreement has been met.
    Thank you for the ability to reply and for your insight into this dilemma.


  3. So, I appreciate the demonstration of the RIDICULOUS bias that you have pointed out in the information reported. I left for my undergrad 5,000 in my student loans and 10,000 in parent plus loans… I consolidated to take repsponsibility for both in June 2006. Since then, I gained nearly 18,000 in additional graduate student loans. which brings my student loan debt under $40,000. I do not think that this is reasonable whatsoever. If it wasn’t for my community college and my current graduate university in which I’ve transferred to, then my loans would be more.

    There is no return on higher education when you have student loans serving other people. – Students get left behind. I am glad to have found another school besides the one that I am currently attendingt that offers Master’s Programs at a reasonable rate. In which, it could be plausible to pay cash, might I add. Paying on a $40,000 student loan isn’t reasonable. In some parts of the south – you can purchase a half way decent home for that… Or a mercedes….


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