Susan Dynarski Discusses the Burden of Student Debt

CHRISTIANE AMANPOUR: Just let me get your take on the remarkable moment, the remarkable generosity of Robert Smith.

SUSAN DYNARSKI, PROFESSOR OF PUBLIC POLICY, UNIVERSITY OF MICHIGAN: I certainly wish I had been a graduate in that class. It’s a relief to students to have their debts paid off, I’m sure. These students will be able to move a lot more quickly and to milestones like buying a house, marriage, buying a car.

AMANPOUR: I mean, look, we did say that, you know, it’s still — there’s still a huge, huge issue all over the country over this. What he’s done is worth, apparently, about $40 million. But there are still some 40 million people holding about $1.5 trillion in loan debt around the country. Why, for people around the world, and maybe people in America who are not fully aware of this, why is this so, so high?

DYNARSKI: The student debt per student is not actually much higher in the U.S. than it is in many other countries. So, students borrow similar amounts in Sweden, they borrow much more in England, they borrow in Australia. So, student debt is kind of the norm across the world. What’s not the norm is that repayment is very difficult in the U.S. So, while most students come out with pretty moderate debts, they have great difficulty repaying those debts because we have a very archaic and poorly regulated loan repayment system.

AMANPOUR: Wow, you’ve just stunned me. I actually I did not know that student debt around — or student borrowing around the rest of the world was sort of comparable to that in America. We hear that in the United States the average graduate has nearly $30,000 in debt on average. And we said it’s the second largest category of debt that’s being held around the country. So, go deeper into that, then. If student debt is sort of a common theme around much of the world, then what is it about the repayment differences?

DYNARSKI: Well, first of all, if we want to think about who’s having problems on their student loans, it is actually not the people who have the largest debts. So, we read in the paper or hear on the news about people who have debts of, say, $100,000. Those debts are not typical at all. Those who have the largest debts are those who have gotten graduate degrees in, say, law or business or medicine, and they earn good incomes and they pay off their debts quite well. For them, investing in a student loan is a fine choice. You actually see, paradoxically, that the likelihood that somebody is going to default on their loan goes up as the size of the debt goes down. So, those who are most likely to default on their loans have debts of only a few thousand dollars.