We've all heard the horror stories: students graduating with more than $100,000 of debt, who are underemployed and struggling to survive under the crushing weight of their student loans. Adding to the national anxiety is the outstanding $1 trillion in student loans — that's more than all credit card debt combined. But what if I told you the real student loan nightmare is not high debt balances of graduates, but low debt balances of non-completers?

People love to read a good anecdote, which is why there are a lot of stories in the media about students with high debt loads graduating in a hard economy and struggling to repay. But the data don't exactly bear this out. The U.S. Department of Education conducted a study last year about those who received bachelor's degrees in 2008 and found that 34.4 percent of students graduated with no debt. In fact, approximately 55 percent of students graduated with $39,999 or less. Only 0.5 percent graduated with over $100,000 in debt.

So what's contributing to the $1 trillion in student loan debt? Partly it has to do with increasing postsecondary enrollment rates over the recession, as well as an increase in the number of students taking on loans. But it also has to do with increases in graduate student debt. Approximately 34 percent of the outstanding loan portfolio is for graduate student debt. Combined median debt for an undergraduate and graduate education has increased from $40,209 in 2004 to $57,600 in 2012 (all figures adjusted to 2012 dollars). If you go on to graduate school, like I did, you're likely to wrack up more debt. But you're also much more likely to be employed and able to pay that high debt load back. Just look at this chart from the Bureau of Labor Statistics:

!enter image description

The real student loan nightmare for any borrower is defaulting on his loan. Once a borrower enters default, he can face steep penalty charges on his debt and a ruined credit record. Also, if the student loans are federal, a likely scenario, the borrower can face wage garnishment, Social Security garnishment, and have any tax refund seized. The large majority of students in default — approximately 63 percent — are non-completers. Bachelor's degree graduates only make up 1.1 percent of all students in default.

As I wrote in a recent article for the Washington Monthly, recent research from the economist Beth Akers shows that borrowers with less than $5,000 in student debt are the ones most likely to be late on payments. This may seem weirdly counterintuitive, but the more debt a borrower incurs, the less likely he or she will default. That's because more money borrowed indicates someone who completed a degree and who will likely have the earnings and employment to make payments on student loans.

Next time you read a "horror story" about someone $100,000 in debt for a bachelor's degree, remember that that borrower is in the minority. The real nightmare comes if you borrow money and don't graduate because you won't have any credential to fall back upon in the labor market.