Facing big student loan bills? A new report from the White House suggests you're actually one of the lucky ones.
The new report contradicts some conventional wisdom about the student loan crisis — namely the argument that young people's investments in federal student loans (in addition to private ones) has been a drag on the economy by making it harder for them to save up money or buy a home.
In fact, society actually "benefits from these investments through such mechanisms as higher tax revenues, improvements in health, higher rates of volunteering and voting, and lower levels of criminal behavior," argues the new report. "The rise in student loan debt has created challenges for some borrowers with lower earnings, but has not been a major factor in the macroeconomy."
Graduates with bachelor's or associate's degrees tend to fetch higher salaries: A worker with a bachelor's degree can expect to earn about $1 million more over the course of a career than a high school graduate in the same job, according to the report.
Instead, the real losers in the student debt crisis are those who took on student loans initially but then did not complete a degree, the report found.
Non-graduates have less earning power and a harder time paying back what they owe — even if it's a lower-than-average sum, the report suggests: "Low-income borrowers have lower completion rates, leading to poorer repayment outcomes."
A quarter of borrowers with debt of less than $5,000 defaulted within three years, compared to only 7 percent of those with more than $40,000 of initial debt, according to the report. And loans of less than $10,000 accounted for nearly two-thirds of all defaults.
Having your student loan payments go into default can be devastating, especially if you don't have a degree: The entire balance of your loans becomes payable, and begins gathering interest, as the government's federal student aid website explains. You also become ineligible for many of the important relief options you have, such as refinancing or deferment.
And carrying debt without a degree is especially painful given the growing earnings gap between those with and without bachelor's degrees, as Pew has reported, dubbing the problem "the rising cost of not going to college."
Now, while attending college certainly improves lifetime income, there are still serious challenges that indebted graduates face, as well.
Finally, not everyone might agree that the economy isn't harmed by the loan crisis: Having less money because of student loan debt stunts "the normal saving, investment and consumption habits that ultimately serve as a guiding force of economic growth," Blackrock chief investment officer Rick Rieder said in a 2015 interview with Bloomberg.
No matter your opinion of the student loan crisis, if you're carrying student debt, it pays to learn more about your repayment options — including how to reduce the overall amount you owe.