# Mean vs. Median Student Loan Debt

I found this surprising (emphasis mine):

The average outstanding student loan balance per borrower is \$23,300. Again, there is substantial heterogeneity in balances of individual borrowers. The median balance of \$12,800 is roughly half the average level, which indicates that a small fraction of people have balances significantly higher than the median. About one-quarter of borrowers owe more than \$28,000; about 10 percent of borrowers owe more than \$54,000. The proportion of borrowers who owe more than \$100,000 is 3.1 percent, and 0.45 percent of borrowers, or 167,000 people, owe more than \$200,000. The distribution also varies by age group: for example, borrowers between the ages of thirty and thirty-nine have the highest average outstanding student loan balance, at \$28,500, followed by borrowers between the ages of forty and forty-nine, whose average outstanding balance is \$26,000 (see chart below).

Actually, there’s a surprise for me in almost every sentence here. First, the mean loan amount we hear tossed around all the time averages in only borrowers — students who do not borrow are not averaged in. To me, that’s deceptive. I can’t find the number right now, but I think between 25% and 33% of undergraduates take out no loans. If it is 25%, you can average in those zeroes by knocking 25% off that figure (I think that works, right?) and you get something like \$17,500 — which isn’t as impressive.

Second, that is a huge difference between mean and median loan amount. That tends to indicate a very skewed distribution overall, with a few higher borrowers bringing up the average dramatically. That’s a different (and easier) problem than a high median debt.

Third, I don’t know what to make of the high borrowers (the top 3%). Maybe these are for medical programs, or something else I don’t understand. Could they even be for undergraduate education? \$100,000? Maybe I’m missing something? Is this accumulated debt + (a lot of) unpaid interest?

If it is for normal, undergraduate programs, should we be encouraging debt of this sort?

Finally, the average debt of the different age groups. Actually, the heavily indebted forty year olds are not  that surprising. Your prototypical debt would be paid off between 24 and 34 years old.  I imagine a high percentage of cases in those older age groups are defaulters, people that couldn’t pay down the debt over twenty years, and that would drag the average up. The amount in the thirty year old age bracket surprises me though, because I would think that people almost done paying down debt would offset people that are defaulting. So there’s something weird going on there….will look into that….

## 2 thoughts on “Mean vs. Median Student Loan Debt”

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