Friday, February 17, 2017

Duration of Under-Graduate Career and Student Debt

Duration of Under-Graduate Career and Student Debt

Originally, this post was motivated by a general interest in student debt levels.  I wanted to present some numbers related to the impact of on-time graduation rates on student debt levels and how this relationship changed in recent years.  I then read a Wall Street Journal article about how some elite colleges are deciding to be stingy on AP credits


I am concerned that a stingy AP exam credit policy will delay graduation and increase debt levels for future students.

Question:   How do student debt levels of students who graduate in four years or less differ from the student debt levels of students who take more than four years to finish their undergraduate career?

Data and Methodology:  The database used for this question is the NPSAS 2012 undergraduate file accessed through the NCES DATALAB.   I am looking at all under-graduates who received a four-year bachelor degree in 2012 and all undergraduates who received a Bachelors degree in 2004.   

Statistics on the percent of Bachelor degree recipients with positive loan debt and the average debt for degree recipients with debt are presented for students who took fiver or more years to graduate and four or fewer years to graduated. 

Statistics are also presented on the share of students taking five or more years to graduate in 2004 and in 2012.

Results:   The first chart below has information on incidence of debt and average debt for students receiving a BA degree in 2012.

Loan Debt and Years in School for Bachelors Degree
 Recipients in 2012
% Graduates With Positive Loan Debt
Average Loan Debt for Student Borrowers at Graduation
(%>0)
(Avg>0)
Five or More Years in College
73.33
31,639.32
Four or Fewer Years in College
62.60
25,527.86
% Diff.
17.1%
23.9%
Total
68.97
29,384.20

Sample consists of people receiving a Bachelors degree from a 4-year institution in 2004

The chart below here provides information on incidence of debt and average debt for students receiving a BA degree in 2004.

Loan Debt and Years in School For Bachelors Degree Recipients in 2004
%  Graduates With Positive Loan Debt
Average Loan Debt for Student Borrowers at Graduation
(%>0)
(Avg>0)
Five or More Years in College
67.58
19,978.00
Four or Fewer Years in College
59.70
16,513.74
% Diff.
13.2%
21.0%
Total
64.23
18,607.88
Sample consists of people receiving a Bachelor’s Degree from a 4-year institution in 2004.


The chart below provides information on share of people graduating in four years or less and share of people graduating in five or more years in both 2004 and 2012.

Years to Graduation for BA Recipients in 2004 and 2012
Year
% of BA Recipients who Graduate in 5 years or More
% of BA Recipients who Graduate in 4 Years or Less
2004
57.45
42.55
2012
59.35
40.65
Diff in Percentage Points
1.89
-1.89
% Diff.
3.3%
-4.4%


Discussion of Results:  The results above highlight the impact of finishing college on time on student debt after college.

In 2012, around 73 percent of BA recipients who took five or more years to graduate had debt.   The comparable percentage for BA recipients who finished in four of fewer years was around 63 percent.

Average debt for BA recipients who finish in five or more years was $6,111 higher or 23.9% higher than debt for students who took four years or less.

In 2004, around 68 percent of BA degree recipients who took five or more years to graduate had debt compared to around 60 percent for people who graduated in 4 years or fewer. 

The difference in debt levels between the two groups was around $3,500.

The percent of people taking five or more years to receive their BA degree went from 57.45 percent in 2004 to 59.35 percent in 2012.

Concluding Remarks:  The results presented here indicate that people who take more than four years to complete an four-year undergraduate program are more likely to take on debt and tend to have more student debt than people who finish their undergraduate program in four years or less.  Moreover, the percent of people who take more than four years to complete their undergraduate degree program appears to be rising.

These results suggest that part of the solution to the problem of increased student debt levels should involve better preparing people for college so they can graduate on time.   In addition, the results presented here indicate that the decision by some elite colleges to reduce amount of credit given to people that pass AP exams could delay graduation and increase debt levels of future cohorts of students.   Subsequent posts will address this issue in greater detail.







Monday, February 13, 2017

Health Care Expenditure Patterns Across Age Groups

Health Care Use and Expenditure Shares Across Age Groups

This post looks at health expenditure spending patters for three age groups – minors and young adults, working-age adults, and Medicare-age people.  I look at number of people in different expenditure categories and share of total expenditures across expenditure levels.

Question:  Using data from the 2014 MEPS survey find the percent of people in each age group that had $0 in 2014.  What percent of people in each age group had relatively low health expenditures, modest health care expenditures, and high levels of health care expenditures?   How did the share of health care expenditures incurred by low-health care users, modest health care users and heavy health care users vary for the three age groups?

Results for Three Age Groups:

The chart below has detailed information on health expenditures for minors and young adults.

Health Utilization and Expenditures for Minors and Young Adults (26 and under)
Upper limit of Health Expenditure Category
# of people (in millions)
% of people
Exp. ($ billions)
% Exp.
$0
19.690
17.1%
$0.0
0.0%
$5,000
84.759
73.8%
$9.2
3.3%
$10,000
6.075
5.3%
$13.1
4.7%
$15,000
1.723
1.5%
$58.7
21.2%
$20,000
0.872
0.8%
$41.8
15.1%
$25,000
0.253
0.2%
$35.7
12.9%
$30,000
0.240
0.2%
$21.9
7.9%
$50,000
0.479
0.4%
$25.1
9.1%
$100,000
0.449
0.4%
$12.0
4.3%
$10,000,000
0.296
0.3%
$59.2
21.4%
Total
114.838
100.0%
$276.7
100.0%
Source: MEPS 2014 consolidated survey

The chart below has detailed information on health expenditures for the working-age population defined as people who are between the age of 26 and 64.  

Health Utilization and Total Expenditures for the
Working Age Population (27 to 64)
Health Expenditure Category
# of people (in millions)
% of people
Exp. ($ billions)
% Exp.
$0
26.110
16.6%
$0.0
0.0%
$5,000
99.292
63.2%
$7.7
1.0%
$10,000
13.714
8.7%
$13.6
1.8%
$15,000
6.311
4.0%
$116.0
15.6%
$20,000
3.866
2.5%
$96.6
13.0%
$25,000
1.953
1.2%
$143.0
19.2%
$30,000
1.283
0.8%
$133.0
17.9%
$50,000
2.528
1.6%
$66.7
9.0%
$100,000
1.361
0.9%
$69.7
9.4%
$10,000,000
0.620
0.4%
$98.5
13.2%
Total
157.037
100.0%
$744.8
100.0%
Source MEPS 2014 consolidated survey

The Chart below has information on health expenditure patters for people 65 and over.

Health Utilization and Total Expenditures for People
of Medicare Age (65 and over)
Health Expenditure Category
# of people (in millions)
% of people
Exp. ($ billions)
% Exp.
$0
1.575
3.4%
$0.0
0.0%
$5,000
23.264
50.0%
$0.9
0.2%
$10,000
8.356
17.9%
$2.5
0.5%
$15,000
4.368
9.4%
$47.0
9.8%
$20,000
2.644
5.7%
$60.0
12.5%
$25,000
1.692
3.6%
$99.6
20.8%
$30,000
0.979
2.1%
$110.0
23.0%
$50,000
2.154
4.6%
$68.8
14.4%
$100,000
1.280
2.7%
$55.2
11.5%
$10,000,000
0.255
0.5%
$34.6
7.2%
Total
46.565
100.0%
$478.5
100.0%
Source MEPS 2014 consolidated survey


Comparing Expenditure Patters for the Three Age Groups:

Let’s start our discussion with two low-expenditure groups:


The share of people with  $0 expenditures was -- 17.1 percent for children and young adults, 16.6 percent for the working-age population and 3.5 percent for older people.

The share of people with health expenditures in the $0 to $5,000 range was 73.8 percent for the young, 63.2 percent for the working-age group, and 50 percent for the older group.   The share of total health expenditures in this category was small for all three groups – 3.3 percent for the young, 1.0 percent for working-age and 0.3 percent for older people.


Let’s skip to the $25,000 to $30,000 expenditure interval:

The share of people with annual health expenses between $25,000 and $30,000 was 0.2 percent for younger people, 0.8 percent for working-age people, and 2.1 percent for older people.  The expenditure shares are 7.9 percent for the young, 17.9 percent for middle age and 23.0 percent for the old.

Let’s skip to the highest expenditure group:

The highest expenditure group – people with expenses over $100,000 – while small in number is a large share of total health expenditures.  The share of people with expenses over $100,000 is 0.3 percent for young people, 0.4 percent for working-age people, and 0.5 percent for older people.   However, the expenditure shares are really large – 21.4 percent for young people, 13.2 percent for working-age people, and 7.2 percent for the oldest Americans.

Concluding Remarks:  The statistics presented here confirm that a very small share of expensive health care cases is responsible for a large share of health expenditures.   The impact of the expensive cases is most pronounced for young people and least pronounced for old people.

The results presented here have important implications for a recent health care reform proposal written by Marian Hagler.



(Full disclosure is called for here.   I am married to Marian.)

Marian has created a bipartisan health care reform proposal that contains some features supported by Democrats and other features called for by Republicans.  One of the features in her proposal involves the establishment of a universal catastrophic health care plan, paid for by the government but administered by private firms. 

The results presented here suggest that such a catastrophic plan would substantially reduce premiums on private insurance.   Of course, a great deal of thought and research is needed in order to figure out the benefit threshold for the catastrophic plan.  The numbers presented in this post can help address this issue.