by Gretchen Wright

STUDENT DEBT LEVELS for newly minted bachelor’s degrees continue to rise, but how high varies greatly by state and by college, according to a new report from the Project on Student Debt at The Institute for College Access & Success (TICAS).  In 2013, seven in 10 (69%) graduating seniors at public and private nonprofit colleges had student loans.  Nationally, the average debt for these graduates was $28,400, two percent higher than for public and nonprofit graduates in 2012, but there was significant variation by college: at nearly one in five colleges, average debt levels increased 10 percent or more.  In both years, about one-fifth of new graduates’ debt was in private loans, which are typically more costly and provide far fewer consumer protections and repayment options than safer federal student loans.

Student Debt and the Class of 2013 draws on the most recent available data, which are reported voluntarily by colleges around the country.  Because virtually all for-profit colleges decline to disclose their graduates’ debt, the national, state, and college figures in this report are for public and nonprofit colleges, which award most four-year degrees.

Recent graduates still face a tougher job market than before the recession, with a 2013 unemployment rate of 7.8%.  However, it is less than half the 2013 rate for those who only finished high school (16.5%).

“A college degree is still the best path to a job and decent pay, and while loans are increasingly needed to get through school, graduating with burdensome debt is not a foregone conclusion,” said Lauren Asher, TICAS president.  “Where you go to college matters, and the kind of loans you have matter, too.  Federal student loans come with crucial consumer protections like income-based repayment plans, while private loans offer little or no relief if you hit a rough patch.”

 

State Highs and Lows 

 

At the state level, borrowers’ average debt at graduation ranges from $18,656 to $32,795, with six states topping $30,000 and only one under $20,000.  Nearly all the highest debt states are in the Northeast and Midwest, with the lowest debt states in the West and South.

 

High-Debt States

New Hampshire   $32,795

Delaware        $32,571

Pennsylvania   $32,528

Rhode Island    $31,561

Minnesota           $30,894

Connecticut     $30,191

Maine            $29,934

Michigan         $29,583

Iowa             $29,370

South Carolina $29,092

 

Low-Debt States

New Mexico      $18,656

California      $20,340

Nevada  $21,666

Dist. of Columbia    $22,048

Oklahoma         $22,174

Arizona $22,253

Utah             $22,418

Hawaii  $22,785

Wyoming $22,879

Louisiana        $23,358

 

“Graduates from New Hampshire colleges are almost twice as likely as Nevada graduates to leave school with student loan debt, and they owe almost twice as much as graduates from New Mexico colleges,” said Debbie Cochrane, research director at TICAS and coauthor of the report.  “The importance of state policy and investment cannot be overstated when it comes to student debt levels.”

College highs and lows 

 

Average debt at graduation varies even more widely from college to college, from less than $2,500 to more than $71,000 in 2013.  The odds of graduating with loans also vary from 10 percent to 100 percent.

The report lists public and nonprofit colleges with especially high or low debt compared to other schools that provide data.  Colleges with higher costs tend to have higher average debt at graduation, but not all high-debt colleges are high-cost.  Fourteen of the 40 high-debt colleges – four public and 10 nonprofit – have tuition and fees below the national average for their sector.  The composition of graduates’ debt also varies: at almost half of the 40 high-debt colleges and at eight of the 20 low-debt colleges, more than one-third of graduates’ debt came from private loans.

Recommendations include call for better data. The report uses the best available data on debt at graduation, but the data have significant limitations. Because colleges are not required to report debt levels for their graduates, only some do.  Only 57% of public and nonprofit bachelor’s degree-granting colleges provided data, representing 83% of 2013 graduates in these sectors.  Even colleges that do provide data may understate graduates’ debt loads if they are not aware of their students’ private loans, and the quality of reported data varies.  For-profit colleges could not be included in the analysis because so few report their graduates’ debt loads.  However, the most recent national-level data show for-profit schools have much higher borrowing rates and debt at graduation than other types of four-year schools.

“Only with comprehensive, reliable data for every college will we see the full picture of student debt.  This is too important an issue for students, schools, and policymakers to rely on voluntary, self-reported data,” said Matthew Reed, TICAS program director and coauthor of the report.  “Federal collection of both federal and private loan debt at graduation is both necessary and long overdue.”

In addition to making the case for better debt data, the report’s policy recommendations include reducing students’ need to borrow by containing college net costs, helping keep loan payments manageable by simplifying and raising awareness of income-driven repayment plans, helping students and families make informed choices about college enrollment and financing, strengthening college accountability to more closely tied a college’s eligibility for federal funding to student and taxpayer risk, and reducing private loan borrowing.

 

At U-M Less for Student Aid = Higher Student Debt

 

State Appropriations to the University of Michigan dropped from $320,662,000 in 2005 to $279,108,700 in 2014, a loss of a total of 12.9 percent over the past descade—some $41.5 million dollars. Drops in state appropriations to the University have been repeatedly cited as the primary reason for increases in tuition.

In February 2013, Dr. Mary Sue Coleman appeared before the Michigan House Appropriations Subcommittee on Higher Education and told the group: “We know we have to have tuition increases, particularly because the state has not been able to invest in us the way we would like. I am very cognizant of the burdens on families, but I am also cognizant of my responsibility to keep this place competitive.”

Between 2005 and 2014, the University of Michigan’s income from tuition and fees rose from $675,392,000 to $1,156,646,746, an increase of $481,254,746—over 10 times the total amount lost from state appropriations over the same period.

The 2013-2014 University of Michigan budget contains another surprise. While students, their parents, federal subsidy and loan programs paid to meet substantially higher costs for tuition and fees assessed by the University of Michigan between 2005 and 2013, officials at the University of Michigan increased the amount allotted to centrally awarded financial aid just 1.8 percent in ten years. Pay for upper-level administrators, during that same period, increased by as much as 150 percent.

Between 2005 and 2014 the amount the University of Michigan collected from students, parents, federal tuition subsidies and loans increased by $560,758,087, or about 50 percent. Viewed in comparison to a 2.6 percent increase in General Fund money allocated to financial aid, students, parents and federal sources are left filling a large gap. It’s a gap that has created a tsunami of blow back as undergraduate and graduate students protest their own rising indebtedness and politicians jump on the Student Debt bandwagon.

According to a 2012 report by online “Bridge Magazine,” “About one in 10 student loans wind up in default in Michigan, about average for the country. But more of those defaults are taken to federal court because the U.S. Attorney’s Office in Detroit has been aggressive in pursuing judgments.”

“Bridge Magazine” also reported, “Analysis found that Michigan college students leave campus with higher debt than the national average, a reflection of higher average net costs at public universities.”

Harvard Magazine recently reported that Harvard’s Faculty of Arts and Sciences (FAS) spent $212,000,000 on financial aid out of tuition revenues that totalled $419,000,000 in 2011. Students whose family incomes are $65,000 or less pay nothing at Harvard, but are expected to participate in work study programs. Families with earnings of between $65,000 and $150,000 are expected to contribute from 0-10 percent of their incomes.

At the University of Michigan, a family with an income of less than $20,000 can expect to pay 12 percent of that income to cover the cost of books and supplies. This need is expected to be met through federal work study programs.

Families with incomes of between $20,001-$40,000 can expect to pay $6,098 per year for a child to attend Michigan, or between 15-30 percent of their income to cover 25 percent of the cost of housing, as well as the cost of books and supplies. Families with incomes as low as $20,001 are expected to take out annual $2,500 loans and pay $500 toward costs.

Families with incomes of $40,001-$60,000 can expect to contribute $8,308 per year, including $2,500 in federal loans, and a $3,218 family contribution, costs that amount to 14-21 percent of those annual family incomes.

Unlike at Harvard, where families with incomes above $150,000 are expected to pay a higher percentage of their incomes than lower income families, University of Michigan’s Financial Aid policies  require lower income families to contribute a proportionally higher percentage of their annual incomes.

A family with an income of just $20,001 with a child who attended U of M for four years, would be expected to make a $10,000 loan contribution (not including interest), plus $2,500 in cash, a burden equal to 15 percent of that family’s income.