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Average Student Loan Debt Jumps 10 Percent

Average student loan debt grew by more than 10 percent between 2011 and 2012, according to new data released Wednesday by the Institute for College Access and Success, also known as TICAS.
The nonprofit advocacy group found that seven in 10 college seniors graduated in 2012 with student debt, which on average was $29,400. In some states the average debt was as high as $33,650, and in others as low as $18,000. Likewise, colleges had average student debt levels ranging from $4,450 to $49,450.
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By comparison, TICAS found 68 percent of students who graduated in 2011 had accrued some amount of debt, but the average was $26,600.

"Despite discouraging headlines, a college degree remains the best route to finding a job in this tight market. But students and families need to know that debt levels can vary widely from college to college," said TICAS President Lauren Asher, in a statement.

Asher said if students need to take out loans to pay for college, federal loans are the most secure way to do so, because they provide more consumer protections and have more flexible repayment options, such as the Income-Based Repayment plan and the Pay As You Earn plan.

Still, TICAS found that one-fifth of student loan debt comes from private loans.

In the report, TICAS makes several recommendations for ways to reduce the need for students to take out loans, including increasing awareness for federal loan repayment plans and allowing students to apply for federal financial aid earlier.

The Department of Education on Wednesday announced the launch of its online "one-stop shop," for example, which is aimed at helping counselors guide students through the ins and outs of financial aid.

"By equipping counselors and mentors with financial aid information, we can help to ensure current and potential students are getting the assistance they need to successfully navigate the process of planning and paying for a postsecondary education," Secretary of Education Arne Duncan said in a statement.

Since colleges are not required by law to report their own graduates' debt, TICAS used data provided voluntarily by public and private nonprofit four-year universities to calculate state- and college-level debt averages.

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"For profit colleges, which accounted for 7 percent of 2012 bachelor's recipients, are not included in these estimates because virtually none chose to share their data," TICAS said in a statement.

According to the report, only nine of 584 for-profit, four-year, bachelor's-granting colleges reported figures for students who graduated in 2012. Still, national data show that more than three-quarters (88 percent) of graduates from for-profit colleges took out student loans, and borrowed 43 percent more than other students, the report says.

Aside from the lack of data from for-profit colleges, TICAS notes that other holes prevent the federal government and other organizations from providing an entirely complete picture of the state of student loan debt.

College-level debt figures may be underestimated, for example, because those numbers don't take into account transfer students, and can miss private loans students have that the college may be unaware of. Additionally, state averages may be higher than currently reported because those figures are based off of the available college data.

Although average student loan debt varies from state to state, roughly the same group of states make up those with the highest and lowest debt levels as in previous years.

In 2012, the state with the highest average student debt was Delaware, with $33,649, followed by New Hampshire, Pennsylvania, Minnesota, and Rhode Island, all of which have average student debt levels of more than $30,000. This was a marked increase from just a year prior when in 2011 Delaware did not fall into the top 10 states with the highest levels of student debt, and New Hampshire topped that list at $32,440.

On the other end of the spectrum, New Mexico had the lowest level of student debt in 2012, at $17,994. Following the Land of Enchantment were California, Arizona, and Nevada, all of which had average student debt levels under $21,000. But in 2011, eight of the top 10 low-debt states had average student debt levels of under $21,000, compared with four in 2012.

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Likewise, average student debt at the college level varies. Overall, 122 colleges reported average debt levels of more than $35,000, the report says. Some public colleges with high debt levels (ranging between $33,650 and $41,650) include Chicago State University, Coastal Carolina University, Kentucky State University and the University of New Hampshire. Some high-debt private nonprofit colleges, with average debt ranging from $41,500 to $49,450, include Becker College in Massachusetts, Quinnipiac University in Connecticut, Utica College in New York, and Anna Maria College in Massachusetts.

Low-debt colleges TICAS identified had average debt levels between $4,450 and $11,750, and included public and private nonprofit colleges, such as California State University—Bakersfield, College of the Ozarks, Gallaudet University, and Howard University.

And although private nonprofit colleges tend to have higher costs than public colleges, which is also associated with higher debt, there are cases of colleges with high costs and low debt, as well as ones with low costs and high debt.

Part of the reason for that difference, the report says, may be due to the fact that after financial aid is taken into account at some high-cost universities, the net price for low-income students may be lower than at some public colleges.

But according to a recent report from the College Board, the average net prices for students have continued to increase, while sticker price tuition levels appear to be plateauing. Some say that's in part due to a one-time bump in federal aid during the height of the recession that hasn't kept pace with increasing tuition levels.

TICAS recommended in its report that states and colleges need to do more to ensure college is affordable for students, including reducing students' need to take out loans.

The group recommends, for example, that Congress double the maximum Pell Grant, which is awarded to low-income students, and that the federal government make changes to provide students with more information about financial aid. Increasing the amount of college-level data on the Obama administration's College Scorecard, better promoting federal student loan repayment options, and allowing students to apply for federal student aid earlier, for example, would help reduce the need for students to take out loans, the report says.

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Additionally, TICAS claims President Barack Obama's plan to tie the amount of federal aid colleges receive to how well they perform on measures of access, affordability, value and student outcomes, hinges on gathering better data.

Some of those recommendations are already in the works. The Department of Education has already embarked on its mission to reach out to struggling student borrowers to help them enroll in loan repayment plans, and both Obama and Duncan have been traveling across the country to get feedback from higher education leaders on what to include on the proposed ratings.