On Monday, 27 April, 2010, the College Board released an interesting report that identifies students who potentially may end up with extreme high debt after graduation. After reading the report, you will be able to recognize whether you or your kids are among them and therefore can prepare to prevent them from making the same mistakes others have made.

Generally the report shows that almost two third of all students in the United States will graduate with a debt. But there are several specific groups of students that apparently are more prone to end up with the most debt compared to their fellow students. Below are the groups of students:

Independent Students

The amount of students who pursue their higher education independently, meaning with no support from their parents at all, are twice as high as their fellow students who are dependent on their parents or families. If you are a student and are married, older, or orphans, you are in this category.

If you are an independent student, financial literacy is especially important as you will have to skillful and knowledgeable enough to manage your personal finances and your debt. Getting a free government grant or scholarship will be something that can help you fund your education independently. Even better, if you have enough time to take a part time job in between your studies, it will most certainly help to pay the cost of your education without having to take out too much debt.

For-Profit College Students

53% of the students who go to for-profit colleges and universities graduate with a total debt of $30,500 or more. Only 4% of students in for-profit colleges actually graduate with no debt at all. For comparison, students of public schools who graduate with a total debt of more than $30,500 are only 12%. 38% of public school students actually graduate without any debt at all.

If you are looking to further your education, it is probably a good idea to research what your options are and choose to go to a public 4-year school as opposed to a for-profit one.

Bachelor Degree Students

The report shows that debt levels for associate degree and certificate earners are much lower than for bachelor degree. 52% of the associate degree recipients and 34% of bachelor degree recipient graduate without a debt. Bachelor degree recipient showed that they have a significantly higher level of non-federal debt and the average of debt that these non-federal loan borrowers have is about $12,600.

Students from Lower-income Families

It is interesting to learn that quite a big number of 31% of students from families whose income is less than $30,000 can actually graduate without debt at all. These students are identified as students from public 4-year school. Only 7% of them actually graduate with a whooping $30,500 in debt or more.

The percentage changes quite dramatically in private not-for-profit 4-year schools. Students from families with less than $30,000 annual income have a much higher debt level. Only 15% of them graduate without debt and 25% of them graduate with a $30,500 debt.

In for-profit schools, the report shows that 0% of the students with lower-income graduate without debt, and 52% of the students graduate with $30,500 or more debt.

It is actually only a matter of common sense, if you can not afford it, find an option that you can actually afford. Instead of choosing to go to a for-profit school, opt for a public school or find a full-scholarship that would take you through your higher education years until the end without you having to pay a dime at all. Otherwise you will be adding a heavy debt burden to your own life after graduation.

Student debt based on Ethnicity

This part is even more interesting as I read the report. It is very much common knowledge that Asians are very good at money management than other ethnicity. The reason for this is because children are actually taught about personal finance and simple money management and balance sheet at home by their parents at a young age. Being raised in an Asian family, I was taught to always track my expenses on a balance sheet when I was only 8 years old.

The report confirms the common knowledge about Asian’s financial literacy. Only 9% of Asian students graduate with a debt burden of $30,500 or more. Compare this with 16% of white students, 14% of hispanic or latino and 27% of African-American students have that much debt when they graduate.

The percentage of students without debt based on ethnicity is

• 40% of all Asian students,
• 36% of all White students,
• 33% of all Hispanic/ Latino students
• and only 19% of Afro-American students graduate without debt.

If you think this may be because Asians don’t take Bachelor degree programs, the report shows that 52% of Asian students are Bachelor degree recipient, along with 52% of all white, 52% of all hispanic/ latino and 51% of all Afro-Americans.

It is wise to pursue higher education and find loans for investing in their education. However, many do not understand that there are so many other options to exhaust first before taking out any loan. Here is a list of available scholarship or free grants that you can take first before borrowing money for your education – 150+ Available Scholarships to Avoid Toxic Student Loans.

If all other resources have been exhausted, note that it is hard to estimate in advance how much you will be able to repay comfortably after you graduate. There are just too many students already from lower-income families that borrow amounts of money that are most likely to cause you difficulties.

To download the whole report, click here.

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