Medical debt vs. student debt: how do they compare?

With President Biden forgiving between $10,000 and $20,000 in student let for borrowers making under $125,000, some are beginning to ask whether other debt types will be cancelled as well.

Often those who disagree with the idea of forgiving student debt argue that such a move would create a slippery slope and that the public could demand cancellation on other debts like medical, auto loans, and more.

Medical debt - a uniquely ‘American’ concept

There is not a complete census of all medical debt holders in the United States and figures tend to vary widely. The Kaiser Family Foundation (KFF) reported in March that around twenty-three million people have a medical debt over $250, but later in June reported that the number was much higher - standing at around one hundred million people. Researchers found through a survey that “50 million adults ― roughly 1 in 5 ― are paying off bills for their own care or a family member’s through an installment plan with a hospital or other provider.”

Since these debt holders “don’t appear on credit reports unless a patient stops paying,” which makes identifying a total amount owed very challenging. On top of these numbers, one in ten people in the US “owe money to a friend or family member who covered their medical or dental bills, another form of borrowing not customarily measured.” These informal arrangements are much harder to track.

All together the KKF estimates that around half of the US population is currently paying with their own medical debt or that of a child, parent, or other family member.

How much medical debt is owed?

Because of the shortages in obtaining complete data on formal and informal medical debt arrangements, knowing the total amount owed is nearly impossible. The amounts tend to vary widely by state which reflects the complicated healthcare landscapes across the country.

For instance, in Wyoming, seventeen percent of the population has medical debt, with the median monthly payment being $1,611. Other states with higher median payments include Alaska ($1,363), Florida ($1,006), and Utah ($1,011). In Texas, more than a fifth of residents have medical debt with the median payment of $990. Rates in South Carolina are even higher with nearly a quarter of residents -- 24.4 percent -- having debts associated with healthcare needs.

The KFF estimates that the debt totals around $195 billion, a fraction of what is owned in student loan payments which total $1.7 trillion.