Student loan debt is a common topic for discussion and concern among prospective college students looking for the institution that makes the best fit for them financially. But while many students expect to take out some amount of loans to pay for college, that amount can greatly differ depending on where the student attends college, according to a new report.
In its 12th annual report on debt for bachelor’s degree graduates at public and private nonprofit institutions, released today, the Institute for College Access and Success (TICAS) finds the average number of students who borrow, as well as how much they owe upon graduation, varies across both states and colleges.
TICAS did not provide a national average in this year’s report because the federal study that provides the best national average – the National Postsecondary Student Aid Study, or NPSAS – is published every four years and will not be available for several more months. TICAS’s study, as in past years, also does not provide information on for-profit institutions because so few of those institutions report the relevant data. While just 52 percent of public and nonprofit four-year institutions that awarded bachelor’s degrees in 2015-16 reported relevant data on student debt, only 2 percent of for-profit, four-year institutions that awarded bachelor’s degrees reported the data for the Class of 2016.
For those who graduated in 2016, the average student debt ranged from $20,000 in Utah to $36,350 in New Hampshire. Across colleges, debt ranged from a low of $4,600 to a high of $59,100. Many of the states both at the high and low ends of the spectrum are the same as in previous years.
The share of students who borrowed also fluctuated between states – from 43 percent in Utah to a high of 77 percent in West Virginia – and between colleges – from a low of 6 percent to a high of 98 percent.
“College is one of the biggest investments Americans make, yet many are making choices without basic information, including how much debt they can expect to graduate with, which varies from college to college and state to state,” said Debbie Cochrane, TICAS vice president and report co-author, in a statement. “We need to make college more affordable and reduce burdensome debt, while giving students and policy makers the information they need to make wise decisions and investments.”
TICAS also found that many students are turning to private student loans, which typically carry higher interest rates and lack the flexible repayment options that federal loans have, before they exhaust their federal loan eligibility. Overall, nearly half (47 percent) of undergraduates who took out private loans in 2011-12 had not yet reached the maximum limit for federal loans.
“For students who need to borrow to cover college costs, federal loans are the options to turn to first. Yet almost half of undergraduates with private loans could have borrowed more in federal loans,” said Diane Cheng, associate research director at TICAS and report co-author, in a statement. “Federal student loans for undergraduates are much more affordable and easier to repay, especially if a borrower falls on hard times.”
The report makes several policy recommendations for colleges, such as providing counseling for students seeking private loans, reserving some financial aid resources for students with emergency situations, and making sure net price calculators are easily accessible. The report also recommends that states can help student borrowers by making state grant aid need-based rather than merit-based, exempting forgiven federal loans from state income tax, and promoting awareness of different repayment plans, among other recommendations.
At the federal level, TICAS recommended reducing students’ need to borrow by strengthening the Pell Grant program, and creating a new federal-state partnership with a maintenance of effort provision for states. Federal policymakers should also look for ways to simplify loan the process of choosing and applying for different repayment plans, improve student loan servicing, and expand consumer information by repealing the federal ban on student-level data.
Publication Date: 9/20/2017