The Realities of Student Debt
This past week, the media has covered stories related to student debt and the challenges for recent college graduates. The student debt level in this country has risen to almost $1 trillion. Of equal concern, the delinquency rate on student loans has increased to 8.9%. Having written these past weeks about the issues of access and affordability, especially for first generation college students, I thought it might be helpful to clarify some of the data related to student debt.
First, there is no dispute that the costs of a college education challenge the fiscal resources of most families. Second, the current employment environment makes it even more difficult for recent graduates to find the perfect job. But the picture painted by the media is too often distorted and exaggerated.
Clearly, there are graduates moving home and finding it impossible to locate a good paying job. But often this is related to a narrow employment and geographic search and a lack of flexibility in thinking about career steps. Certainly, there are graduates who have huge debt that will cause financial stress for years. But that is simply not the norm. Here are some facts drawn from a recent study conducted by the Council of Independent Colleges including data from the Department of Education, the College Board and the National Association of Independent Colleges and Universities.
1) Of all the recent graduates with a bachelor’s degree, each year one third of these students did not have any
educational debt (38% from public institutions; 28% from independent institutions; and 4% from for-profit
2) The average debt level of bachelor’s degree recipients who borrowed is $20,000 ($17,700 for public institution
graduates; $22,380 for independent institution graduates; and $32,650 for for-profit institution graduates). As CIC
notes in its study, this level of debt is commensurate with the price of a modest automobile, something all of our
students seem able to afford.
3) The greatest debt problems seem to be related to for-profit institutions. While these students represent only 11%
of the total college graduate population, these graduates account for almost one-half of all of the defaults.
While these data are rarely reported clearly and accurately, there is also a related myth. Some believe that only the wealthy can afford a private, independent college education. The facts indicate a very different reality. Independent colleges enroll students of all financial backgrounds and at about the same percentages as public institutions for low- and middle-income students. Here are those facts:
1) Students from families with incomes of less than $25,000 represent 26% of public institution students and 22% of
independent institution students.
2) With family incomes between $25,000 and $50,000, the enrollment levels are the same. This is also true for families
with incomes less than $75,000.
3) More families with incomes over $100,000 have children enrolled in independent institutions. But the variance is
relatively small (29% at independent institutions; 24% at public institutions).
Access and affordability remain important issues for all colleges and students. But a college education is more affordable than many people understand. I will share more findings from this report next week.
(As always, your comments and questions are welcome.)