Distribution of Federal Student Debt in Wisconsin

Our previous post showed 715,800 Wisconsinites carry a combined $23.1 billion in student loan debt—or on average, $32,230 per borrower. While these figures are a good starting point, looking at averages alone can hide the substantial variation that exists across student loan borrowers. In this post, we look beyond the average to gain additional insights into the distribution of federal student loan debt in Wisconsin.

The following chart uses data from the U.S. Department of Education’s Office of Federal Student Aid to show the number of borrowers (and their aggregate outstanding debt) based on how much they owe. These data include all federal undergraduate, graduate, and parent loan borrowers as of March 31, 2021, and will be updated when new quarterly data come available. As the chart below shows, 15% of Wisconsin’s federal loan borrowers owe less than $5,000. Since these borrowers carry relatively small loans, their debt accounts for just 1% of Wisconsin’s total outstanding debt. (The dark-blue bars in the figure below represent the percent of borrowers and light-blue represents the percent of outstanding debt for each group.)

On the opposite end of the distribution, just 2% of Wisconsin borrowers owe more than $200,000. Despite being a small share of borrowers, this group accounts for 14% of the state’s outstanding debt.

Wisconsin’s distribution is very similar to other states across the country and the interactive chart above allows users to compare the distributions for other states and the U.S. total. Nationwide and in Wisconsin, most borrowers carry relatively low levels of debt (typically less than $20,000) while a small share of borrowers carry relatively large debts.

Although small debts may not seem like a public policy problem, most defaults occur on relatively small loans. As we will explore in later posts, the median size of a defaulted student loan in Wisconsin is just over $9,100. Students who leave college with debt but no degree, and those struggling to find employment in the labor market, tend to have the hardest time repaying even relatively small student loans. In future posts, we will explore how student debt varies geographically across the state and across individual colleges and universities to gain greater insights into the distribution of student loan debt.