Given that the median young college graduate earns $46,900 per year, this person would clear after taxes roughly $32,000 per year and could pay back $6,000 in debt and thus be clear of her debt in roughly 12 years.
So, the debt challenge appears to be an issue for the left tail of the distribution. Either this group's parents can't help with the debt or their job market after their undergraduate experience is such that they are not earning enough to cover their debt.
What did they major in --- in college? Take a look at this picture from The Economist
Your choice of major matters in determining your lifetime earnings and thus your future loan default rate. I would make an even smarter point that this differential will grow even larger as the market for lawyers continues to deteriorate. In the past, people could major in history or English and then go to law school but that option will not be attenuated and this will increase the STEM and Economics wage premium.
I wonder if more young people would major in more high payoff fields if they knew they couldn't default on their loans. What is the punishment for defaulting on student loans?
This website lists some costs to the borrower from defaulting but this doesn't look like such a loss relative to shedding a $50,000 debt. The self interested rational strategy is to default and this suggests that moral hazard and major choice is a serious issue.
An economist would argue that the interest rate should be higher for those who major in riskier subjects such as the Humanities. Would this price differentiation create adverse selection? How can a debt contract be designed for those who choose to invest their time and human capital in low economic returns fields? Would the Humanities faculty say that these students should pay less tuition?
I am an applied economist. Let's see some data on major choice by loan defaulters. My hypothesis is that econ majors and STEM majors have much lower default rates. This due both to selection and treatment by the major. Let's do some data analysis here!
UPDATE: I minored in history in college but I also took several mathematics courses, statistics and econometrics, and learned computer programming. My point is that college students are young adults and they are responsible for their own choices. If they choose to avoid quantitative classes that would provide them with the skills to manipulate "Big Data" after they graduate, they cannot claim that they were duped during their undergraduate years and now regret their choices. The ability to form a hypothesis and to rigorously test it should be probably be the only requirement that every university has on its books. For example, GIS is a very useful skill that can be used in very creative ways.
There are two other margins here. How many of the defaulters attend one of these for profit colleges? If the borrowers knew they couldn't default, would fewer of them attend such colleges? Also, for humanities majors --- if they studied STEM material how much would they gain from it? I understand the concept of comparative advantage. How would humanities students perform in STEM classes? Would they gain from these classes?