Taxpayers May Lose On High-Balance Student Loans

Taxpayers May Lose On High-Balance Student Loans:
"The Brookings Institution has released a new research report by Adam Looney and Constantine Yannelis looking at student borrowers with very high balances. 
The research provides a good reminder that borrowers with high balances, who often feature prominently in media coverage of student debt, are the exception. 
Just 14% of all federal student loan borrowers have balances above $50,000, and the majority of those individuals borrowed to pursue expensive graduate degrees.

Despite their relative rarity, high-balance borrowers deserve our attention for the risk they pose to the federal government’s finances. While high-balance borrowers represent just a small share of the individuals with outstanding student loans, they owe over half the outstanding balances...

Preston Cooper/Forbes

Source: Looney and Yannelis (2018). https://www.brookings.edu/wp-content/uploads/2018/02/es_20180209_looneylargebalances.pdf

But looking at balances rather than borrowers tells the exact opposite story. 
While just 5% of borrowers in default owe more than $50,000, these borrowers also owe over 25% of the dollars in default. 
Though high-balance borrowers default at a relatively low rate, the risk they pose to taxpayers is substantial..."
Read on!