Not all student loan debt is created equal

September 4th 2014

Lindsay Haskell

As college tuition continues to rise and student debt reaches over $1 trillion as a whole, it's easy to view the entire crisis as one problem. But in reality, student debt varies greatly based on both what type of university you attend and whether you pursue a graduate degree or not.

The Council of Graduate Schools reports that in recent years, graduate school enrollment has decreased, and debt likely has something to do with it. Not only does graduate education account for 40% of the total student debt, but the average graduate student ends up owing between $42,000 to $50,879 while the average undergraduate student owes only $29,000.

This number is also highly dependent on what type of university a student decides to attend - a public university (think University of Indiana), a private nonprofit university (think Oberlin college), or a for-profit university (think the University of Phoenix). Out of the total federal student loan disbursements for the 2012-2013 academic year, which amounted to $100.7 billion, $47.1 billion went to public universities, $34.3 billion to private nonprofits universities and $19.3 billion went to for-profit universities.

Despite receiving the lowest amount of federal student loan money, for-profit university students have the highest likelihood of defaulting on their student loans. Although for-profit universities accounted for only 11% of students enrolled in the 2010-2011 academic year, 43% of their students starting repayment in 2011 defaulted by September 2012. In fact, in the fiscal year of 2011, 13.6% of for-profit university students with a federal student loan defaulted, compared to 9.6% of public university students and 5.2% of private nonprofit universities. Turns out those liberal arts colleges might not be so terrible for your wallet, after all.