Report: Despite Slowed Increase in College Debt, More Must Be Done for Students
By Joelle Fredman, NASFAA Staff Reporter
While increases in average college debt have slowed for the class of 2017—growing by just 1 percent from 2016—there are numerous things that institutions, states, and federal policymakers can do to help students continuing to struggle with accessing higher education, according to the Institute of College Access and Success (TICAS).
Average student debt increased 4 percent each year between 1996 and 2012 before overall slowing through 2016, according to federal data from the National Postsecondary Student Aid Study (NPSAS) collected every four years. In its thirteenth annual report on student debt at graduation, TICAS found, based on annual college surveys, that this figure has continued to climb only slightly; student loan borrowers who earned a bachelor’s degree from a four-year institution in 2017 owed an average of $28,650, which was just one percent higher than the year before.
The report includes several suggestions as to why this may be the case, such as the slowed growth of the cost of sticker prices at colleges and universities between 2011-12 and 2015-16. Additionally, between this same period of time, state spending on higher education rose by 23 percent on average, though it still remains below Recession levels.
TICAS also suggested that the fact that the net price of public four-year colleges grew at a slower rate than sticker price, as well as increases in grant aid, helped keep borrowing rates down. While 31 percent of students at public, four-year institutions received institutional grants in 2011-12, that figure rose to 38 percent for the class of 2016-17, which on average received $1,000 more in aid, according to NPSAS data. Private colleges also offered more aid to students in 2015-16 than in 2011-12; for every $100 they received in tuition and fees, they spent $4 more on scholarships and grants than they did in 2011, according to a recent report from the National Association of College and University Business Officers (NACUBO).
However, TICAS wrote in the report that while this slowdown is a “welcome trend,” it does not indicate that “the burden of student debt is less of a concern, or that students’ struggles to afford college are not still serious and persistent.” After grants and scholarships, students in 2015-16 still had almost $11,000 left over in unmet need, according to NPSAS data.
“More must be done to ensure that the burden of student loan debt is manageable, and that it is not borne disproportionately by vulnerable groups of students,” according to TICAS. “... Additional investments from states and the federal government, well-targeted to students with financial need, remain an important priority for reducing students’ need to borrow.”
TICAS wrote that there are several things institutions can do to help curb borrowing and instill healthy borrowing habits among their students. For example, TICAS wrote that colleges should develop “clear, reasonable” student budgets to avoid lowballing college costs, “which can lead to unexpected financial struggles and additional debt if students’ expectations about costs and their plans for covering costs are out of line with reality.” They also recommended that schools provide loan counseling on private loans in addition to federal loans, ensure that net price calculators are user-friendly, and set aid resources aside for students in financial emergency situations.
In addition to steps that schools can take to help students avoid taking on too much debt, TICAS argued that states can play a role by adopting practices such as allocating aid based on financial need instead of merit, exempting forgiven federal loans from its state income tax, which is currently the practice in California and Pennsylvania, and by promoting income-driven repayment plans (IDR) to “help borrowers stay on track and avoid default.”
TICAS also urged states to set “institutional accountability standards” for schools accepting federal funds. It wrote that while state attorneys have been involved in investigating poorly-performing colleges and universities, there are things states can do before students are harmed, such as by implementing policies like requiring schools to pass set graduation and default measures before being eligible for state grant aid, which is currently the practice in California.
"While student loans can be an excellent investment, there is a crisis among the millions of students who struggle to repay their loans, and they are disproportionately students of color or from low-income families," TICAS President James Kvaal said in a press release. "We need to invest more in student aid and in colleges to reduce students' need to borrow, and make their loans easier to repay."
In its report, TICAS also urged federal policymakers to adopt new laws and guard current protections to assist student borrowers. TICAS wrote that “the most effective way to reduce student debt is to reduce the amount students are asked to pay,” and suggested that policymakers work toward increasing and strengthening Pell Grants.
“Need-based grants reduce low- and moderate-income students’ need to borrow, yet Pell Grant recipients continue to bear disproportionate student debt burdens. This is in no small part due to the fact that the Pell Grant currently covers the lowest share of the cost of college in the program’s history,” TICAS wrote. “We recommend that Congress work toward doubling the maximum federal Pell Grant to restore its purchasing power, and also permanently restore its prior automatic annual in ation adjustment in order to maintain the grant’s value going forward.”
TICAS also wrote that federal policymakers should make loan repayment “simple, manageable, and fair,” through efforts such as streamlining IDR plans into a single plan to simplify the loan repayment system, allowing students to give permission to ED to access their tax information when applying for IDR plans to reduce additional paperwork and chances of error, and improving students’ experiences with federal loan servicers.
Other recommendations for policymakers included supplying students with more data on graduation rates, borrowing trends, and debt rates. TICAS also urged Congress to keep and strengthen consumer protections already in place, such as gainful employment and the 90/10 rule, which may be eliminated through the reauthorization of the Higher Education Act.
"It's clear we need to do far more to protect the most vulnerable students,” Diane Cheng, research director at TICAS and a coauthor of the report said. “A college degree is a powerful tool for social mobility, but unaffordable student debt can hold borrowers back."
Publication Date: 9/19/2018
Mark L | 9/19/2018 3:53:53 PM
The use of the average, versus the median, as the measure of central tendency for any monetary measure is inherently biased: skewed to the right. Debt cannot drop below $0. Outliers drive the average. Separate from the effective distortion of typical debt, these numbers scare many of the students and families with whom I speak. Worse, it weighs heavily on the decision to attend among those for whom a college degree will have the greatest positive impact.
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