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Media Press Releases New Research Shows Student Debt’s Secret Price Tag

New Research Shows Student Debt’s Secret Price Tag

Households with Student Loans Pay Thousands More When Buying Homes, Financing Cars, Using Credit Cards

May 15, 2020 | WASHINGTON, DC — Today, the Student Borrower Protection Center (SBPC) and Credit Builders’ Alliance (CBA) released new research revealing the secret price American families pay when taking on student debt. The research, which was based on an analysis of millions of consumer credit records provided by Experian, shows that Americans with high student debt burdens could pay nearly $30,000 in hidden costs across common financial products, including mortgages, credit cards, and auto loans. As lawmakers consider steps to boost the economy amid the coronavirus pandemic, this research offers new evidence of the financial drag that student debt imposes on millions of families. 

“Student debt is a massive burden for millions of Americans. Today’s report shows that the true cost of this debt extends far beyond monthly student loan bills with borrowers forced to pay tens of thousands of dollars in extra costs when buying a house, purchasing a car, or using their credit card,” said Seth Frotman, Executive Director of the Student Borrower Protection Center. “As Americans face economic strain from the fallout of the coronavirus, those struggling with student debt will fall even further behind without significant relief.” 

“One of the factors that significantly affects one’s credit score is their credit utilization ratio. Essentially this means that if one has significant debt, their credit score is usually adversely impacted. Since the credit score is such an important factor in whether one gets approved for credit and if so, what their interest rate is, having a poor credit score will limit access to affordable credit,” said CEO Dara Duguay of Credit Builders Alliance.

Today’s report, Data Point: The Secret Price Tag of Student Debt, is available at:

More than 45 million Americans collectively owe over $1.6 trillion in student loan debt. This debt has far-reaching effects on borrowers, hindering their ability to save for retirement, buy a home, form a family, and start a small business. However, little work has been done to quantify the impact of student debt on borrowers’ household balance sheets. Today’s report fills in that gap, demonstrating that as student debt burdens rise, borrowers’ credit profiles can also take a hit, forcing borrowers to pay extra for mortgages, auto loans, credit cards, and other credit products.

Student Debt’s Secret Price Tag

The SBPC and CBA examined how borrowers with different levels of student debt repay common financial products—credit cards, mortgages, and auto loans—to determine the added cost to each borrower for owing student loans. Specifically, this analysis breaks down the additional price a borrower with moderate and high student debt burdens will pay for these credit products compared to a borrower with lower or no student debt burden.

In this study, a borrowers’ debt burden was calculated using student loan debt-to-income ratios, meaning the portion of a borrower’s income going towards their student loan payment. A high ratio indicates a high student debt burden. The cost of the credit products was based on publicly available information regarding the average repayment term and balance of the products. 

The research shines a light on the true cost of student debt and shows that even those borrowers who can afford their monthly student loan payment pay an additional secret price on other credit products. Those borrowers who are most vulnerable and bear the highest debt burdens, or those who are experiencing a financial shock, are hit with the biggest cost. 

Key findings include:

  • A typical borrower could pay $29,000 in extra charges. An individual with a high student debt burden could pay as much as $29,000 more in total over the repayment term for a typical auto loan, mortgage, and credit card compared to the same borrower with a lower level of student debt stress. A borrower with a moderate student debt burden would pay more than $11,000 in extra charges for the same package of credit products.
  • A borrower experiencing financial strain during the pandemic shoulders an even bigger added cost. Research shows that families rely on credit card debt to weather economic shocks, including job losses and unexpected bills. As the pandemic drives unprecedented levels of unemployment, an individual with a high student debt burden could pay tens of thousands of dollars in additional charges compared to the same borrower with a lower level of student debt stress. Compared to a typical borrower with a high student debt burden, a borrower experiencing financial strain who is also shouldering a high student debt burden would pay hundreds of dollars more in credit card interest charges alone, making it harder to cover basic needs.
  • A borrower with lower credit use could still pay more than $13,000 in extra charges. A borrower with lower-than-average auto, mortgage, and credit card debt but a high level of student debt stress could still pay $13,000 more across this bundle of credit products than the same borrower with a low student debt burden. 
  • Vulnerable borrowers pay the biggest price on other credit products for their student loan debt. Hidden costs are greatest for borrowers forced to take on bigger student debt burdens — leaving low-income borrowers, women, and borrowers of color to pay the biggest price across their financial lives. In addition, public service workers, like teachers or social workers are also at higher risk of being hit with greater hidden costs due to their high debt burden in relation to their income. Further, this secret price may contribute to widening economic and racial inequality, as borrowers are less able to build wealth.

Together, these findings underscore the need for policymakers to take immediate action to address the burden of student debt for all borrowers, particularly in the context of federal efforts responding to the coronavirus pandemic and its effect on the economy. This is especially relevant given the secret price tag of student debt is the highest for the borrowers who are most often forced to bear the brunt of a weak labor market and who also failed to realize the benefits of the most recent economic boom. 

The study also illustrates the need for additional research on the intersection of student debt and other consumer financial products and the secret price tag student debt imposes across borrowers’ financial lives. The SBPC and CBA are committed to explore these and other timely research questions to inform policymakers working to address the student debt crisis.


The Student Borrower Protection Center is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.

Credit Builders Alliance serves as a unique and vital bridge between our nonprofit members and the major credit reporting agencies (CRAs). Through this support, CBA helps people who are outside the financial mainstream build credit to achieve their goals and enjoy financial security for themselves and their families. Our core services, CBA Reporter and CBA Access, provide nonprofits with both the ability and critical technical assistance to report loan data to the CRAs and to pull low-cost client credit reports for the purposes of financial education, outcome tracking and underwriting.

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