Ten years ago, student loan debt wasn’t a topic that captured many headlines. There weren’t discussions about the financial ramifications it could have on society. And it certainly wasn’t a major topic in presidential elections.
But the signs were there that if the growth in student loan debt continued, it could have serious negative consequences for students, families, and even colleges. That’s why in 2005, the Institute for College Access and Success (TICAS) began the Project on Student Debt to track the average debt students graduate with each year. In its 10th annual report, released Wednesday, TICAS found that while the percentage of seniors graduating with debt has inched up slightly, from 65 percent in 2004 to 69 percent in 2014, the average amount of debt has grown at more than twice the rate of inflation.
Among seniors who graduated in the Class of 2014, the average amount of debt was $28,950 – up two percent from 2013 ($28,400) and up 56 percent from 2004 ($18,550). By comparison, inflation grew 25 percent between 2004 and 2014.
“Borrowers are graduating with a lot more debt than they did 10 years ago, and the Class of 2014’s average debt is the highest yet,” TICAS President Lauren Asher said in a statement. “Student debt has rightly become a major policy issue. Students and families need better information and better policies to make college more affordable and debt less burdensome.”
As past reports have shown, the average debt for graduates of the Class of 2014 varies by both state and college. Broken down to the state level, the average debt at graduation for 2014 varies from $18,921 in Utah, to a high of $33,808 in Delaware. At the college level, the average debt amount varied even more, from a low of $4,750 to a high of $60,750. Asher also noted at an event on Capitol Hill Tuesday that the percentage of students who borrow fluctuates between schools as well: at some, 2 percent of students may graduate with debt, while at other schools 100 percent of students take out loans.
“We’re in a world where, unfortunately, student debt has become a necessity – and it shouldn’t be,” Asher said during the event.
Tamara Draut, vice president of policy and research at Demos, echoed Asher’s comments, saying it shouldn’t be the norm for 7 in 10 students at public four-year colleges and universities to have to borrow to pay for their education.
“It should be possible in America to be a working-class kid and go to your state college or university and graduate without debt,” Draut said.
It’s not just the growth in student loan debt that has changed over the years, according to the panelists (who included Kevin James of the American Enterprise Institute, Doug Lederman of Inside Higher Ed, Max Espinoza of Scholarship America, Rohit Chopra of the Center for American Progress, Asher, and Draut).
The way that students repay their loans, the professions of student loan servicing and counseling, as well as the broader conversation around the severity of student loan debt have all shifted. It’s difficult to pinpoint what the most pressing problem is, presenters suggested – helping students who have yet to borrow, or those who have already defaulted on their loans; targeting a specific group of students perhaps more likely to face negative consequences, or focusing on student loan borrowers as a whole.
James said during the panel, for example, that the narrative of the undergraduate student who leaves school with upwards of $100,000 in student loan debt, while troubling, isn’t as common as it is made out to be. But another narrative is emerging that is “in some ways, more troubling,” he said: the nontraditional students who borrow a smaller amount of money, potentially drop out of college, and default at much higher rates than other students.
Chopra also noted that while there’s an “intense interest” in education circles about the connection between the cost of college and the rise in student loan debt, it’s important to note that family wealth and income also hasn’t kept pace over the last 10 years.
In its report, TICAS also makes several recommendations to reduce the burden of student loan debt, including reducing the need for students to borrow in the first place, keeping monthly payments manageable, providing better information about student loan debt, strengthening college accountability, and reducing “risky private borrowing.”
But the report also highlights how much we still don’t know about student loan debt.
Because colleges are not required to report debt levels for graduates, the report fails to capture information from hundreds of colleges that decline to report the data needed, particularly for-profit colleges. Many schools also do not report private loan borrowing in the data they provide, the report said.
“While there is broad consensus that private loans should be used only as a last resort, 47 percent of undergraduates who took out risky private loans in 2011-12 did not use the maximum available in safer federal student loans,” the report said. “College financial aid offices can and should play a significant role in reducing their students’ reliance on private loans by counseling students, particularly those who have untapped federal loan eligibility, when they apply for private loans.”
NASFAA asked a panel of experts to weigh in on this issue during the 2015 National Conference in New Orleans. To watch the debate, see this video from our conference in July.
Publication Date: 10/28/2015