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38% Of Students Graduate College Debt-Free — Here’s What They Do Differently
Only 38% of college students graduate without any student loan debt, but the ones who pull it off don’t always do it the way you’d expect.
Some of the strongest predictors are counterintuitive: students who major in philosophy beat out education majors, study-abroad participants carry less debt than those who stay home, and students who skip the FAFSA are far more likely to graduate debt-free.
Graduating debt-free isn’t just luck or rich parents — though the data shows both help. After analyzing federal student aid data (PDF File), we found a handful of choices that meaningfully raise your odds, from the major you pick to the state you live in to whether you live at home.
Here’s what the numbers say.
Table of Contents
Study Smart
Money Matters
Impact Of College Choice
Impact Of Financial Aid
Impact Of Student Characteristics
Final Thoughts
Study Smart
Students with a better grade point average (GPA) in college are less likely to graduate with student loan debt, as shown in this table. There is a similar correlation between high school GPA and graduating with no loans.
|
College Grade Point Average |
% of All Undergraduate |
% of Students In Bachelor’s |
|---|---|---|
|
Lower than 2.50 |
35% |
21% |
|
2.50 – 2.99 |
37% |
26% |
|
3.00 – 3.49 |
38% |
32% |
|
3.50 or higher |
42% |
37% |
Almost three quarters (74%) of students who graduate with no debt have a 3.00 or higher college GPA.
Curiously, students who take college classes in high school or AP classes are just as likely to graduate with no student loan debt as students who don’t.
Students who take International Baccalaureate (IB) classes, however, are more likely to graduate with no debt, 40% vs. 33%.
Major In Mathematics Or Architecture
Almost half of students who obtain a Bachelor’s degree in mathematics or statistics (47%) or architecture and planning (48%) graduate with no student loan debt. More than half of students who get a Bachelor’s degree in economics (51%) or philosophy (52%) graduate with no student loan debt.
This compared with education and healthcare, where less than a quarter (24%) of Bachelor’s degree recipients graduate with no student loan debt.
Related: How To Pick A College Major: 3 Top Strategies
Attend On-Campus Classes
A third of students who took no distance education classes graduated with no student loan debt, while only a quarter of students whose entire Bachelor’s degree program was provided through distance education were able to avoid debt.
This statistic is a bit surprising as distance education courses are often advertised as more economical.
Participate In Study Abroad Programs
Roughly 40% of students who participate in study abroad programs graduate with a Bachelor’s degree and no student debt compared to 30% of students who don’t participate in these programs. Students who participate in study abroad programs also have a higher adjusted gross income (AGI) than students who don’t.
Money Matters
As this table shows, undergraduate students with parents who have an adjusted gross income (AGI) of $100,000 or more are more likely to graduate with no student loan debt.
Four-fifths of undergraduate students who graduated with no debt received financial help from their parents. Among students in Bachelor’s degree programs who graduated with no debt, 87% received financial help from their parents.
Students whose parents have doctoral degrees, such as PhDs and MDs, are more likely to graduate with no debt, perhaps because their parents tend to be wealthier.
Become Financially Literate
Around 36% of students who answered three financial literacy questions correctly graduated without student loan debt, compared with 29% of other students.
Similarly, 36% of students who don’t carry a balance on their credit cards graduate with no student loan debt. This compares with less than a quarter (22%) of students who don’t pay off their credit cards in full each month.
Related: 10 Best Personal Finance Books (That Will Change Your Life)
Establish Financial Security
A student’s ability to come up with $2,000 in the next month correlates strongly with whether the student graduates with no debt, as shown in this table.
|
Financial Security: $2,000 Within The Next Month |
% With No Debt |
|---|---|
|
Certainly could come up with the $2,000 |
47% |
|
Probably could come up with the $2,000 |
30% |
|
Probably could not come up with the $2,000 |
22% |
|
Certainly could not come up with the $2,000 |
17% |
This statistic make sense as it’s an indicator of the “margin” that a student has in their finances and the ability to cover financial stressors without borrowing.
So, for example, if you’re able to build up some emergency fund cash reserves by working some summer jobs or side hustles throughout your high school years, it could significantly help you avoid student debt during college.
Impact Of College Choice
We talk a lot about the importance of school choice if you want to minimize student debt. And the data from NPSAS:16 once again shows how this decision can impact your finances during your collegiate years.
Choose A College With A Lower Net Price
Net price is the difference between the cost of attendance and all grants. It’s the discounted sticker price, the amount that the student will have to pay from savings, contributions from income, and student loans.
As the net price decreases, the student will be better able to cover college costs with resources other than loans.
|
Net Price |
% With No Debt |
|---|---|
|
Zero |
60% |
|
$1 to $5,599 |
40% |
|
$5,600 to $10,899 |
31% |
|
$10,900 to $18,799 |
25% |
|
$18,800 or more |
33% |
More than three quarters (79%) of undergraduate students who graduated with no debt enrolled in colleges with tuition and fees less than $10,000. Among students in Bachelor’s degree programs, more than half (56%) of the students who graduated with no debt enrolled in colleges with tuition and fees less than $10,000.
More than half (53%) of undergraduate students and more than a third (36%) of students in Bachelor’s degree programs who graduated with no debt enrolled in colleges with a net price less than $10,000.
Students are more likely to graduate with no debt at colleges with generous “no loans” financial aid policies. These colleges replace loans with grants in the financial aid packages of students with demonstrated financial need. Likewise, students are more likely to graduate with no debt at colleges with a lower cost of attendance, such as in-state public colleges.
College Affordability
When tuition is a lower percentage of income, the student is more likely to graduate with no debt, as shown in this table.
|
Tuition As % Of Income |
% With No Debt |
|---|---|
|
0% |
67% |
|
1% to 25% |
35% |
|
26% to 50% |
30% |
|
51% to 75% |
27% |
|
76% to 100% |
28% |
There is a similar result based on the college affordability index, as shown in the next table. The college affordability index is the net price after grants as a percent of income. A lower college affordability index leads to a lower likelihood of graduating with student loan debt, especially when the college affordability index is less than 25%.
|
College Affordability Index |
% With No Debt |
|---|---|
|
0% |
61% |
|
1% to 25% |
37% |
|
26% to 50% |
28% |
|
51% to 75% |
28% |
|
76% to 100% |
27% |
Cut College Costs By Living At Home With Your Parents
Half (50%) of undergraduate students who live at home with their parents graduate with no debt, compared with 36% of students who live on-campus. However, they’re less likely to graduate.
Enroll At An Out-Of-State College, But Only If You Can Afford It
Almost half (49%) of students pay out-of-state tuition graduate with no loans, compared with less than a third (31%) of students who pay in-state tuition.
Even though out-of-state tuition is higher, wealthier students are more likely to enroll in an out-of-state college.
Live In The Right State
Students who live in certain states are more likely to graduate with no debt.
These states include:
- Alaska (58%)
- California (39%)
- Florida (40%)
- Hawaii (44%)
- Louisiana (37%)
- New Mexico (36%)
- Utah (36%)
Don’t Enroll At For-Profit Colleges
A third of students at public 4-year colleges (34%) and private non-profit 4-year colleges (31%) graduate with no debt, compared with 14% of students at private for-profit 4-year colleges.
Among all undergraduate students, 81% of students who graduated with no debt enrolled at public colleges, compared with 13% at private non-profit colleges and 6% at for-profit colleges. (79% of the students enrolled in public colleges who graduated with no debt were in-state students.)
Among students in Bachelor’s degree programs, two-thirds (68%) of students who graduated with no debt were enrolled at public colleges, more than a quarter (28%) were enrolled at private non-profit colleges, and only 4% were enrolled at for-profit colleges.
Related: For-Profit College Student Loan Forgiveness List
Enroll At A Very Selective College
Students who enroll at the most selective colleges are more likely to graduate with no loans, in part because these colleges have more generous financial aid policies.
|
Selectivity (4-Year Nonprofit Institutions) |
% With No Debt |
|---|---|
|
Not public or private nonprofit 4-year |
14% |
|
Very selective |
44% |
|
Moderately selective |
29% |
|
Minimally selective |
23% |
|
Open admission |
34% |
Impact Of Financial Aid
When many students think of “financial aid,” they think of loans. But there are many types of financial aid that don’t involve debt. And, in fact, these resources can play a critical role in helping college students avoid taking out student loans.
File The FAFSA
Students who apply for federal student aid by filing the Free Application for Federal Student Aid (FAFSA) are actually much less likely to graduate with no student loan debt, 15% vs. 66%.
Why is this the case? Well, first of all, not filing the FAFSA is often an indicator of wealth. Students who receive a Federal Pell Grant, for example, are also much less likely to graduate with no student loans, 16% vs. 39%.
Second, students who don’t file the FAFSA are also ineligible for federal student loans, making it more difficult for them to borrow.
Go To College At The Same Time As Siblings
More than a third (39%) of students who have siblings in college graduate with no loans, compared with less than a third (31%) of students who do not have siblings in college.
This may be due to financial aid formulas that divide the parent contribution portion of the expected family contribution (EFC) by the number of children in college.
This changed in 2024-2025, though, when the simplified FAFSA dropped this aspect of the federal need analysis methodology. However, some colleges may still provide a sibling discount.
Win Private Scholarships
Students who win private scholarships are less likely to graduate with student loan debt, especially students who win at least five figures in scholarships.
Roughly 42% of students who win more than $10,000 in private scholarships graduate with no debt, compared with 31% of students who don’t win any scholarships. More than half (56%) of students who win more than $25,000 in private scholarships graduate with no student loan debt.
Student Characteristics
Wondering how factors like your age and marital status impact your odds of graduating college with student debt? We break down the data below.
Age
Younger, more traditional college students, are more likely to graduate with no debt. More than a third (36%) of students age 15-23 when they graduate with a Bachelor’s degree graduate with no debt, compared with less than a third of students age 24-29 (27%) and age 30 and older (21%).
Dependency Status
More than a third (34%) of dependent students graduate with no debt, compared with about a quarter (27%) of independent students.
Marital Status
A third (32%) of students who are single graduate with no debt, compared with 29% of students who are married and 23% of students who are separated.
Children And Other Dependents
About a quarter (26%) of students who have dependents graduate with no debt, compared with about a third (32%) of students who do not have any dependents.
Military Status
Almost half (46%) of students who are serving on active duty in the U.S. Armed Forces graduate with no debt. This compares with a third (34%) of veterans and less than a third (31%) of students with no military service.
Related: Guide To Military And VA Education Benefits To Pay For College
Race
Asian students are the most likely to graduate with no debt, while Black or African-American students are the least likely to graduate with no debt.
|
Race/Ethnicity (With Multiple) |
% With No Debt |
|---|---|
|
White |
31% |
|
Black or African American |
15% |
|
Hispanic or Latino |
34% |
|
Asian |
55% |
|
American Indian or Alaska Native |
24% |
Black or African-American students who enroll at Historically Black Colleges and Universities (HBCUs) are also slightly less likely to graduate with no debt, 11% vs. 16%.
Gender
Men are more likely to graduate with no loans than women (34% to 29%). This trend is especially prevalent among:
- Less selective colleges
- Older non-traditional students (age 30 and older)
- Married students
- Students who have dependents
- Students who are serving on active duty in the U.S. Armed Forces.
There are also some academic majors in which there is a significant difference by gender, as shown in this table.
|
Academic Major |
% of Men With No Loans |
% of Women With No Loans |
|---|---|---|
|
Agriculture |
28% |
45% |
|
Architecture |
36% |
65% |
|
Computer And Information Sciences |
33% |
19% |
|
General Studies |
39% |
24% |
|
History |
27% |
43% |
|
Liberal Arts |
45% |
24% |
|
Physical Sciences |
42% |
24% |
|
Public Administration/Social Services |
49% |
20% |
Final Thoughts
Some of the factors listed above, like your age and race, are obviously out of your control. But other factors, like the school you attend or the major your select, are your personal choices.
Pay attention to the areas that are within your sphere of influence and do whatever you can to minimize your chances of needing to take out student loans during college. Even if you can’t avoid student debt completely, mindfulness can help you take out fewer loans than you would have otherwise.
Finally, realize that taking out some student loans during college isn’t the end of the world. With the right student loan repayment strategy, you can effectively manage your student debt after you graduate even while you work towards your other financial goals.
Editor: Robert Farrington
Reviewed by: Chris Muller
The post 38% Of Students Graduate College Debt-Free — Here’s What They Do Differently appeared first on The College Investor.
Housing crisis is a driver of domestic violence and school dropouts: think tank
A Quebec think tank says the province’s housing crisis is a driver of domestic violence and negatively affects school dropout rates.
The AI Economy Demands Generalists, Not Specialists
The future belongs to people who connect the dots.
If you’re surprised by how well the stock market is doing, so is Jamie Dimon
Markets across the world have had plenty to worry about in the past decade. A global pandemic, a major war between Ukraine and Russia in Europe, steady inflation across major economies, including the U.S., rising tensions between China and the U.S., and, most recently, a conflict in the Middle East.
And yet the S&P 500 is up nearly 80% over the past five years, the Nasdaq up more than 86%. Even with the global oil supply shock in over the past three-plus months, Wall Street has remained bullish—thanks, in large part, to the promise of artificial intelligence.
If investors are surprised by seeing their portfolios continue to tick up in the face of such headwinds, so is JPMorgan Chase CEO Jamie Dimon.
The Wall Street veteran admitted he’s a little taken aback by the market’s apparent complacency at present. Speaking in a discussion held by the Council on Foreign Relations, Dimon said: “I am surprised because I think that you have Ukraine, Iran, oil, Russia, and our relationship with China. That stuff is really important for the free world, but it’s not necessarily the economy today.”
While consumers and analysts may be focused on the short term, Dimon said he was concerned about the shifting “tectonic plates” shaping the economy’s trajectory over the much longer term.
“I am quite worried about it,” the banker added. “They may determine the economy, but it may be a year from now, a few years from now, or maybe it will all be reserved somehow. But I’m quite concerned about it, so put me in the more cautious category about how that plays out.”
To be in a category among the more skeptical on Wall Street is nothing out of the ordinary for Dimon. The JPMorgan chairman wrote in 2024 that he ran America’s largest bank with a military leadership tactic in mind: the “OODA loop.”
The acronym stands for observe, orient, decide, act—with Dimon adding: “One cannot overemphasize the importance of observation and a full assessment—the failure to do so leads to some of the greatest mistakes, not only in war but also in business and government.”
How long does the cycle last?
There are a handful of tailwinds supporting market optimism at present, despite the broad-based global issues that have dampened Dimon’s spirits. He acknowledged that confidence can be derived from AI capex, which is booming to the tune of $700 billion this year and is expected to continue, from unemployment holding steady at 4.3%, and from GDP expanding at approximately 2%.
Consumers have also been given a boost by the One Big Beautiful Bill Act. While research suggests much of that relief has been offset by fuel price rises resulting from the Middle East conflict, it is nevertheless a stimulus injection that helped the economy.
But all cycles must come to an end, which Dimon is well aware of. While he said these factors aren’t necessarily “bad” right now, he added: “You don’t know what they’re going to do a year from now, or two years from now. We’re in a bull market. It’s like a little tsunami. When that kind of thing happens, it’s very hard to stop.”
Bitcoin And Crypto Markets Face Significant Challenges Amid Strategy’s Preferred Stock STRC Turmoil
The cryptocurrency sector is experiencing fresh volatility as investor concerns mount over Strategy Inc.‘s (NASDAQ:MSTR) innovative but now-stressed preferred stock offering. The company’s Variable Rate Series A Perpetual Stretch Preferred Stock, traded under the ticker STRC and often referred to as “Stretch,” has suffered a significant decline, trading well below its $100 par value and pushing yields higher.
This development has added pressure to the Bitcoin price and broader digital asset sentiment, highlighting the intricate links between corporate Bitcoin strategies and market stability.
Strategy, a major corporate holder of Bitcoin with hundreds of thousands of coins in its treasury, introduced the STRC preferred shares in mid-2025 as a mechanism to raise capital for additional Bitcoin acquisitions while offering investors a relatively stable yield product.
Designed as a perpetual instrument with adjustable monthly dividends aimed at maintaining the stock near par, it was positioned as a lower-volatility entry point for those seeking Bitcoin exposure through credit-like returns rather than direct price swings.
Early on, it attracted attention for its structure, which treated distributions in a tax-efficient manner and was backed by the firm’s substantial Bitcoin holdings.
However, recent market conditions have tested this setup. Bitcoin‘s price stagnation and periodic selloffs have strained the economics of maintaining dividends.
In late May, the company disclosed the sale of 32 Bitcoin—its first such move in a while—to help cover STRC payouts, a decision that surprised some observers given Chairman Michael Saylor‘s long-standing emphasis on never selling the asset.
The preferred stock has since tumbled to record lows around the mid-$80s range in recent sessions, with heightened trading volumes reflecting investor unease.
This drop has effectively increased the implied yield above 11%, signaling that the market demands greater compensation for perceived risks tied to the company’s leveraged Bitcoin-centric model.
Compounding the issue, Strategy’s common stock (MSTR) has also declined notably year-to-date, amplifying worries about the overall capital structure.
Critics and analysts have pointed to potential challenges if Bitcoin remains range-bound for an extended period, as sustained sideways movement could erode confidence in the sustainability of dividends without further asset sales or adjustments.
Some market participants have called for more direct communication from leadership on long-term viability, especially as the firm has paused certain equity issuance programs used for Bitcoin purchases.
In response to the growing chatter on social media, Saylor offered a concise public statement on the Juneteenth holiday when markets were closed.
He acknowledged the difficulties of market swings, reaffirmed faith in Bitcoin‘s underlying strength, and expressed gratitude for supporter loyalty.
“Volatility is never easy,” he noted, while emphasizing that “Bitcoin keeps working” and that the team remains committed.
This measured comment served as the primary official acknowledgment of the STRC pressures but stopped short of detailing specific remedial steps or forecasts.
The situation underscores broader themes in the evolving Bitcoin corporate treasury narrative.
Strategy‘s aggressive accumulation has inspired many, yet it also demonstrates how intertwined leverage, dividend obligations, and crypto price action can create feedback loops.
While Saylor has historically maintained optimism—viewing temporary capital shifts toward other sectors like AI as ultimately bullish for Bitcoin’s scarcity appeal—the immediate fallout has contributed to cautious trading across digital assets.
As the crypto sector digests these events, attention turns to whether Strategy can stabilize its preferred offerings through cash reserves, further innovations, or Bitcoin’s eventual recovery. For now, the incident serves as yet another reminder of the risks and rewards in Bitcoin-backed financial products.
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Why Traditional Financing Stops Working After Your Second Rental (And What to Do Instead)
This article is presented by LendingOne.
You have two rentals. Both are cash-flowing and performing exactly the way you underwrote them. You’ve been patient and disciplined, and now you’re ready to go get property No. 3.
So you go back to your bank. And the bank says no.
Not because the deal is bad, your credit tanked, or you did anything wrong. It’s because, on paper, in the way banks are required to look at you, you appear overextended. You have two mortgages on your debt ledger and a third you’re asking them to add, but the numbers don’t work the way the bank needs them to.
Most investors who hit this wall assume they need to slow down, save more, wait longer, and get their finances in a better place before they try again. What they don’t realize is that they hit a loan product problem.
There’s a difference. And understanding it is the whole point of this article.
Section 1: What’s Actually Happening to You (The DTI Trap)
The debt-to-income ratio (DTI) is the number your lender uses to decide if you can handle more debt. Take everything you owe each month, divide it by what you earn each month, and you get a percentage. Conventional lenders generally want to see that number below 43%-45%. Go above it, and the loan gets denied.
Here’s where it gets frustrating for real estate investors specifically: When you buy a rental property with a conventional mortgage, that mortgage payment shows up on your debt ledger. The bank counts it as an obligation. The problem is that the bank doesn’t fully offset that debt with your rental income, even when the property is cash flowing and the tenant is covering the whole thing.
Every rental property you add makes your DTI worse on paper, regardless of whether the properties are actually making you money.
So you go from one property to two, and the math still works. From two to three, and suddenly you’re getting denied. You didn’t make a bad investment or run out of money. You ran into a structural ceiling built into the loan product you were using.
Most investors hit this wall somewhere around property three or four. The ones who know what’s happening find a different loan. The ones who don’t think they’ve reached their limit.
Section 2: DSCR Loans Change the Question Entirely
Conventional financing asks one question: Can you personally afford this debt? DSCR financing asks a completely different question: Can this property afford itself?
DSCR stands for debt service coverage ratio. Here’s the math: Take the property’s annual net operating income and divide it by the annual debt service (principal, interest, taxes, and insurance). The number you get is the DSCR.
If a property generates $26,400 a year in rent, has an NOI (net operating income) of $22,000 after expenses, and the annual debt payments on the loan are $18,000, your DSCR is 1.22 (DSCR = NOI / Annual debt service). The property makes 22% more than it costs to carry. From a DSCR lender’s perspective, that property qualifies on its own merits.
Your W-2 income? Largely irrelevant. Tax returns? Not required. DTI on your other properties? Not the point.
The lender is evaluating the asset, not you. If the asset works, the loan works.
This is why DSCR loans exist. They were built specifically for investors with good deals and bad-looking personal finances, because those two things often go together. These investors often are:
- Self-employed investors whose write-offs make their income look low on paper
- W-2 investors who are already carrying two or three mortgages and can’t add another without blowing their DTI
- Investors who are growing fast and conventional underwriting just can’t keep up
LendingOne focuses specifically on this type of lending.
Section 3: The Same Deal, Two Different Answers
For example, an investor has two existing rentals and wants to buy a third: a single-family home with a $300,000 purchase price, which rents for $2,200 a month in the market. The deal cash flows. The DSCR comes in at 1.18.
The conventional lender pulls the investor’s full debt picture: two existing mortgages, a car payment, and student loans. The rental income from the existing properties gets partially credited but not fully offset. The DTI calculation comes back too high. Denied.
The DSCR lender looks at the property:
- $2,200 a month in rent
- NOI after expenses
- Debt service on the proposed loan
- DSCR of 1.18, above the 1.0 threshold
Approved.
Same investor and deal. Different loan product, different outcome.
| Conventional | DSCR | |
| Qualification basis | Borrower income + DTI | Property cash flow |
| Tax returns required | Yes | No |
| Pay stubs/W-2 | Yes | No |
| Down payment | 15%-25% | 20%-30% |
| Approval timeline | 30-60 days | Often two to three weeks |
| Portfolio property cap | Typically caps at 10 | No cap |
| Best for | Owner-occupied/early acquisitions | Scaling a portfolio |
The table makes it obvious: These are not the same tool. Conventional mortgages are great for what they’re designed for, but not for an investor trying to get from property three to property 10.
Section 4: What DSCR Doesn’t Fix (Be Honest With Yourself)
DSCR loans are not magic. Here’s what you’re working with.
Rates are higher than conventional
Not wildly higher, but higher. You’re paying a premium for the flexibility of not having to document your income and for a loan product that a conventional bank won’t touch. Model that into your numbers before you apply.
Down payment requirements are real
Plan on 20% to 30% down for a purchase. LendingOne and most DSCR lenders hold firmer on equity requirements because the loan is being secured by the asset rather than your personal income. You need skin in the game.
Credit still matters
Most lenders want to see a credit score of around 680 or above. It’s not the only factor, but it matters.
Rental history helps
If the property is already occupied and generating income, you’re in the best position. If you’re buying something vacant or projecting income from a new lease, you’ll typically need a signed lease agreement showing the projected rent. Having 12 months of actual rental history is the cleanest path.
None of this is disqualifying. It’s just math. Run your numbers using the actual DSCR rate, down payment, and NOI before deciding whether the deal still works. For most investors who’ve hit the conventional wall, it still does.
Who Actually Needs This
If you have high W-2 income, a solid DTI, and you’re buying your first or second investment property, conventional financing might still be your best move. Use it while it works.
But if you’re self-employed and your tax returns make your income look like a riddle, you’re already carrying two or three mortgages and the bank keeps counting them against you, and you’re trying to build a real portfolio and conventional underwriting keeps getting in the way of deals that actually pencil out, that’s exactly who DSCR financing was built for.
The bank probably never mentioned it to you. That’s because retail banks don’t offer it. It lives with investment-focused lenders like LendingOne, who specifically built their business around investors who are past the point where conventional financing serves them.
The ceiling you hit was the loan’s ceiling. DSCR is how you build above it.
Ready to see if your next deal qualifies? LendingOne works with investors across the country on single-family, multifamily, and short-term rental properties. Get started here.
Nobel Laureate Daron Acemoglu on ‘brainless’ AI discourse, myth of capitalism and Gen Z revolution
Daron Acemoglu has a number for everything. The MIT economist — who won the Nobel Memorial Prize in Economic Sciences in 2024 for his work on institutions and prosperity — estimates that roughly 0.55% in total factor productivity gains is what AI will actually deliver over the next decade, a fraction of Wall Street’s euphoric projections. He estimates only about 5% of tasks will be profitably automated in the near term, equivalent to a 1% or 1.5% increase in GDP.
And when asked how much of the current AI discourse he finds intellectually serious, he doesn’t hesitate: about 20%.
“I find all of this discussion of capitalism so brainless,” Acemoglu told Fortune, insisting that we should be focused on the “enormous increase” in corporate power and monopoly instead. “That’s what we should be talking about. What we should be talking about is the displacement and unequalizing roles of AI.” When asked how much of the discourse he finds, in his words “brainless,” he barely paused. “About 80%,” he said. He clarified that the thinking is rather speculative or close to fictional, not stupid per se.
“Unfortunately, a lot of the left is a big contributor to that,” he added, stressing that it’s a central point of his forthcoming book What Happened to Liberal Democracy? “The success of liberal democracy was rooted in social democratic, center-left ideas, and governments playing a leading role. And that space cannot be filled by stupid ideas and by being completely unaware of, you know, what AI is doing, what are its capabilities, what are its implications, nor could it be filled by, Frankfurt School-influenced quasi-Marxist oppressed/oppressor dynamics applied to everything.”
He added acidly that he’s grown sick of the phrase “colonizing AI” as an example of unhelpful Marxist rhetoric, detached from a center-left lens that would actually be practical and helpful. It’s vintage Acemoglu, extending his decades-long argument that the health of economies and the health of democratic institutions are inseparable — and that AI is now stress-testing both simultaneously.
‘Capitalism is a completely useless word’
Ask Acemoglu where he stands on capitalism and he’ll redirect the question entirely.
“I don’t like the term capitalism,” he said. “It makes it sound like there is a uniform model that includes Sweden, Egypt, Argentina, Honduras, the United States, South Korea, Japan. There’s no overlap between these economies, how they are organized.” The only overlap he sees is that they have markets, “but so did the Soviet Union.”
His preferred frame, developed across Why Nations Fail and The Narrow Corridor with co-author James Robinson, is inclusive versus extractive institutions. The question isn’t whether a country has markets, but whether its economic and political rules broaden participation and reward innovation — or whether they concentrate power at the top and extract value from everyone else.
Seen through that lens, AI is not troublesome in its own right, but rather whether it is positioned as inclusive or extractive. Today’s AI hyperscalers, he argues, fit the extractive mold almost perfectly: concentrated ownership, regulatory capture, and a business model that extracts data and attention at scale.
Instead of reckoning with that, he said, we get all kinds of other talk about whether capitalism is mutating into technofeudalism, or whether AI will automate away every job in existence. “People are saying such stupid things. I can’t believe it.”
The productivity illusion
Acemoglu’s skepticism about AI’s economic upside isn’t contrarianism — it’s grounded in a framework he’s applied to every major wave of automation for decades.
Productivity gains from automation, he explained, only materialize if machines can do tasks significantly cheaper or better than humans. If the improvement is marginal, or if integration costs eat into gains, the math doesn’t add up — even if the automation is widespread. “It’s not that you cannot get big productivity gains from automation,” he said. “It is that it’s not as easy as sometimes it’s presumed.”
What would actually move the needle? True “human complementarity,” Acemoglu insisted, would be AI that enables workers to do things they simply couldn’t do before, expanding the range of tasks and services on offer, rather than just accelerating existing ones. He turned media critic briefly: “Podcasts massively expanded the demand for news,” he noted. If AI can do what he calls “new tasks” — versions that were not previously available — “that is the real pathway to true human complementarity, not just enabling you to do what you were doing before in a better way, or in a faster way.”
Acemoglu nodded when Fortune mentioned his finding that most research on AI productivity is overblown because it overwhelmingly focuses on easy, well-defined tasks where context is clear. These are not representative of the economy, which simply isn’t set up with so many of those, and AI is just not great for hard tasks yet. “You need new tools, sort of a tool that reliably understands and distills the best research, and is not swayed by the worst research in a particular field, and provides that to you in a context relevant and an accurate manner, and allows you to interrogate it.”
The sharpest version of his argument cuts even deeper: the productivity gains that AI bulls are penciling in don’t just require better models — they effectively require artificial general intelligence. For genuinely huge productivity gains from automation, “then we really, really need something close to AGI for that,” Acemoglu said, referring to the concept of artificial general intelligence. “So that’s why AGI is not just a theoretical issue — it’s really relevant for these productivity projections.” He’s skeptical we’re close. Current models, he argues, perform badly across too many dimensions of real-world work — they can’t read a room, they can’t connect non-obvious dots across domains, and they fail precisely where human judgment is most valuable. The gap between what LLMs do well in demos and what they do reliably in complex, high-stakes professional environments remains, in his view, far wider than the industry’s marketing suggests.
The revolution risk
Acemoglu added that the Fortune 500 should hope that he’s right, paradoxically, that AI won’t be that useful.
“If it were the case that 30%, 40% of new university graduates can’t find jobs,” he said, “what would that do to democracy and social peace? Wherever that has happened in the past, you’ve had revolutions.”
Revolutions, he added quickly, are inherently unpredictable, shaped by the interplay of repression, redistribution, and the ambient attitudes of a generation. Social media adds a new variable that history offers no reliable guide to. “In the past, youth did not have Instagram, TikTok, and Twitter,” he said. “Perhaps that changes things. I have no idea.”
But the direction of concern is clear. A generation of workers who trained and credentialed for an economy that AI has since restructured — and who feel economically stranded — is a constituency that has historically not stayed quiet. The grumbling at this spring’s commencement ceremonies, he suggested, may be an early signal.
What would fix it
Acemoglu’s critique comes with a prescription, though he’s frank about how far the current moment is from acting on it.
The U.S. needs to have a genuine conversation about what is socially desirable from AI — not just what is technically possible or financially profitable for a handful of hyperscalers. That conversation, he argues, has to center on wages, jobs, shared prosperity, and “meaningful, dignified lives for workers.” It also has to include serious global governance — including cooperation with China, which he says is ahead of the U.S. in integrating AI into manufacturing, robotics, and commerce, even as it lags on large language models.
“I think that [U.S.-China collaboration] would be so beneficial,” he said. “We need global governance for AI. We also need the ‘AI race’ not to get out of control. And we need the two sides to share best practices on things that are useful for humanity,” he said, mentioning disease control, productivity, shared best practices and global safety regulations. The current geopolitical climate, he acknowledged, makes that nearly impossible. “The only bipartisan issue in the United States right now is China bashing,” he said, adding that it was that way during the Biden era.
The intellectual failure, in his view, runs deeper than policy. It’s a failure of imagination — an inability to articulate what a genuinely human-centered AI future would look like, and the political will to demand it.
“We’re all so blindly taken in by what OpenAI, Anthropic, and a few other hyperscalers are offering,” he said, “because we haven’t articulated a reasonable alternative.” Squint and you hear the old phrase from the Paul Newman classic Cool Hand Luke: what we have here, gentleman, is a failure of imagination.
Commercial and multifamily mortgages cross $5 trillion outstanding
After producing $26.3 billion in new commercial and multifamily mortgage debt in the first quarter of 2026, the industry’s total amount of mortgage debt outstanding rose to $5.02 trillion, according to data from the Mortgage Bankers Association.
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The industry association said total multifamily mortgage debt alone increased by $23 billion, or 1% in Q1, representing a $2.32 trillion increase from Q4 2025, the MBA said.
It is “a milestone that speaks to the resiliency and depth of commercial markets,” according to a statement from Reggie Booker, the MBA’s associate vice president of commercial research. “Agencies, GSEs, and banks steadily expanded their holdings. Despite modest pullback in CMBS, the overall picture is one of a market that continues to move forward.”
As an investor group, commercial banks held the largest share of commercial or multifamily mortgages, with $1.9 trillion, or 38%, the MBA said. Agencies and GSEs followed, with $1.2 trillion, or 23%.
Life insurance companies and commercial mortgage-backed securities, CDs and other ABS issues hold $775 billion and $637 billion, respectively, representing 15% and 13% of the total, respectively.
For the multifamily mortgage sector alone agency and GSE, and GSE portfolios dominate holdings, with $1.2 trillion total multifamily debt outstanding, or half. Banks and thrifts followed, with $665 billion, or 29%, the MBA said.
When examined by changes in commercial/multifamily mortgages outstanding, banks and thrifts once again came out on top, the MBA research found. This group had an increase of $17.5 billion, or 0.9%, followed by agency and GSE portfolios and MBS, which increased their holdings by $3.3 billion.