By Owen Daugherty, NASFAA Staff Reporter
The student loan debt landscape is disparate and varied, and no one figure or data point can tell the full story of how Americans with bachelor’s degrees are faring with their student loan debt once they graduate.
In an attempt to paint a picture of the state of student loan debt in the country, the Institute for College Access and Success (TICAS) released its sixteenth annual report detailing the average debt for the class of 2020.
While the report does not include national figures for the average debt among graduates with bachelor’s degrees from public and nonprofit institutions, it does find vast variation in debt levels across states as well as colleges.
National figures were not included in this iteration of TICAS’ annual report because data from a nationally representative federal study that is typically released every four years by the Department of Education (ED), which will cover students who graduated in the class of 2020, is not slated to be released this year.
In recent years, TICAS noted the average amount of student debt that bachelor's degree graduates took on has remained steady and even decreased slightly in some years, though those flattening levels came amid all-time highs.
After increasing at an average of 4% per year from 1996 to 2012, the average debt level among all bachelor’s degree recipients from public and nonprofit institutions plateaued in 2016 at $29,650. From 2016 to 2019, average debt levels remained essentially flat.
"Despite flattening levels of student loan debt in recent years, the debt of graduating classes has remained near an all-time high, and the debt borrowers hold continues to make their lives financially perilous," TICAS president Sameer Gadkaree said in a statement accompanying the report. "Given pre-existing economic disparities and vast racial disparities in wealth accumulation in our country, the students who suffer most from these disruptions tend to be [Black, Indigenous, and People of Color], first-generation, and those from low-income backgrounds."
At the state level, average student debt upon graduation varied greatly, from the low of $18,350 in Utah to $39,950 at the high end in New Hampshire. Further, new graduates' likelihood of having debt varied from 39% in Utah to 73% in South Dakota, and in nineteen states, average debt was more than $30,000 and more than $35,000 in six states.
As for private debt, there was significant overlap among states with high average overall debt amounts and higher average private debt. Eight states were in the top 10 for both average private and overall debt, which includes federal, private, state, and institutional debt. Generally speaking, states with more private loan borrowing and high average private debt levels were concentrated in the Northeast, and states with less private debt were concentrated in the West.
It’s also instructive to analyze student loan debt loans by different types of loans, including federal and private student loans. On average, students who attended nonprofit institutions were more likely to graduate with debt from private loans and leave school with higher debt amounts compared to those who attend public institutions.
The share of graduates with private debt exceeded 15% at nearly 40% of nonprofit institutions, compared to 22% at public institutions, while the average private debt borrowed exceeded $50,000 at 15% of nonprofit institutions assessed in the report, compared to less than 1% at public institutions.
Overall, TICAS noted that recent surveys show that private student debt reached an all-time high at the onset of the coronavirus pandemic. The estimated total of private student debt among current and repaying students was at $136.3 billion in March 2021, a 47%increase from $92.6 billion in March 2014, the earliest year the data was reported. Private loans now make up nearly 8% of all student loan debt, TICAS added, and the origination of new private loans nearly doubled from academic year 2010-11 to 2018-19.
“Time will tell how the pandemic impacts the longer-term trends in private debt and its consequences for borrowers,” the report stated.
As relief measures enacted to provide relief to borrowers amid the pandemic are set to expire in the coming months, the report urges policymakers to consider the student loan debt many hold and ensure borrowers are protected. With tens of millions of borrowers set to resume payments when the pause on payments and interest accrual comes to an end Jan. 31, 2022, ED “must make a robust plan to ensure borrowers will be protected during this transition, especially as this transition coincides with major shifts in the servicing system.”
“Throughout the remainder of the pause, [ED] must provide borrowers with clear and actionable information and resources, including access to timely and accurate assistance and guidance from servicers and the Department,” the report stated.
To that end, ED is in the process of implementing measures to ensure borrowers have a smooth transition to repayment, as well as creating a safety net for borrowers who were in default on their loans before the pandemic, according to Politico’s Michael Stratford.
Additionally, the report argues the department should clear the backlogs of claims related to borrower defense, total and permanent disability (TPD), and public service loan forgiveness (PSLF), something ED has already begun doing for borrowers with TPD and PSLF claims.
Other recommendations for federal policymakers included sustainable funding for public institutions, increasing need-based aid such as the federal Pell Grant, implementing better protections for borrowers with private loans, strengthening accountability mechanisms for institutions, and improving transparency and oversight.
As for long-term solutions that could alleviate the student debt many borrowers hold, the report recommends reforming the student loan payment system holistically.
“Policymakers should create an improved income-driven repayment plan that is easy to access, ensures more affordable monthly payments, prevents ballooning balances, and guarantees automatic, tax free forgiveness after a reasonable number of payments,” the report urges. “Policymakers must also reform the student loan default and collections system to give borrowers a fresh start.”
Publication Date: 11/17/2021