By Owen Daugherty, NASFAA Staff Reporter
A significant majority of students who graduated from non-profit higher education institutions left with student loan debt, owing on average $28,950, according to a new report.
In its 15th annual report on student debt at graduation, the Institute for College Access & Success (TICAS) found 62% of students had debt upon graduation, a 3% decrease from the previous year’s report. The average debt among borrowers in the graduating class of 2019 declined by less than 1 percentage point.
"After years in which falling state funding was a driver of greater student debt, the recent leveling out of student debt shows the value of investments in higher education," said Debbie Cochrane, executive vice president of TICAS. "However, the COVID-19 pandemic has already reshaped the higher education landscape in important ways and placed profound financial pressures on states, colleges, and students. Federal and state policymakers must make hard choices to prevent student debts from rising quickly, as they did during the Great Recession."
Using data from their first report, TICAS analyzed the change in debt load for borrowers at graduation over 15 years.
The findings show that borrowers in 2019 left school with significantly more debt than their counterparts in 2004. The average student debt at institutions in the report’s sample grew by roughly 56% in that time period, from $18,550 to $28,950, outpacing inflation, which accumulated to 36% over the same period.
Notably, the report’s findings vary greatly by state. Utah had the lowest state average for students’ debt load at graduation, registering at $17,950. New Hampshire had the highest average, at $39,400. Additionally, new graduates' likelihood of having debt also varied, with Utah and New Hampshire again representing both ends of the spectrum.
The average debt was more than $30,000 in 21 states, and in five states it was over $35,000. “Many of the same states appear at the high and low ends of the spectrum as in previous years,” the report noted.
States where students left school with higher debt on average are generally concentrated in the Northeast, and low-debt states are mainly in the West.
Due to the fact that higher education institutions are not required to report debt levels for their graduates, and the available college-level federal data do not include private loans, to estimate state averages, the report used the most recent available figures voluntarily reported by colleges, including 52% of all public and private? nonprofit bachelor’s degree-granting four-year institutions, which represented 79% of graduates.
The figures included in the report are only for public and private nonprofit colleges due to the fact that virtually no for-profit colleges report what their graduates owe, according to TICAS.
"While the voluntarily reported data used in this report remain the best available for showing to what extent student debt has grown across states and colleges over the past 15 years, they show why more comprehensive and comparable data remain sorely needed," said Oliver Schak, co-author of the report and TICAS research director.
Another key question the report set out to answer was how successful borrowers who obtained a four-year bachelor's degree are at repaying their student loans, looking specifically at the share of borrowers who had difficulty paying off their federally-held loans within 12 months of graduating.
However, due to the onset of the COVID-19 pandemic, TICAS was unable to accurately examine that question this year.
Using data from borrowers who graduated with a bachelor’s degree in 2016, 40% of Black borrowers and 29% of Latino borrowers experienced difficulty making federal loan payments within one year after graduation, compared to 22% and 19% of white and Asian borrowers, respectively. Low-income and first-generation students were also more likely to face repayment struggles, such as missing payments or entering into deferment or forbearance, the report found.
However, the fact that data from previous years shows bachelor’s degree recipients struggling to repay their loans, “even in good economic times, underscores the importance of the temporary help afforded to borrowers in light of COVID-19,” the authors argued, referring to the suspension of student debt payments through the end of the year.
For institutions, the report suggests taking a close look at trends among borrowers across types of students and types of debt, noting that “uncovering these trends on a college campus is the first step to addressing them.”
Additionally, the report suggests setting aside institutional aid for students experiencing emergencies so they aren’t forced to take out additional loans, and providing all borrowers supplemental counseling and information, among other recommendations.
As for federal policy recommendations, the report calls for doubling the Pell Grant, noting that the ongoing pandemic has led to widespread job loss and unemployment, meaning “current and incoming students will be facing unprecedented struggles when starting the new academic year and, likely, for years to come. Many students will need significant additional support to pay for college.”
And to combat the trend of disinvestment of higher education, the report calls for public colleges to be funded at an equitable and sustainable level.
“To reverse this trend and restore the promise of a public higher education for all students, we propose a renewed federal-state partnership that injects new federal funding into public colleges to increase educational quality and to reduce net costs, especially for low-income students and underrepresented students of color,” the report states. “In exchange, states must maintain or increase their own investments in public higher education.”
Publication Date: 10/7/2020