December 29, 2013
2012 grads have highest-ever student debt
The college graduating class of 2012 is, on average, deeper in the hole with student loan debt than any class before. And graduates of Pennsylvania colleges -- state and private -- are more likely than graduates of other colleges nationwide to be burdened with student debt, according to data from the U.S. Department of Education and national surveys of colleges and college graduates.
An independent, nonprofit organization based in Oakland, Calif., the Institute for College Access & Success, recently released its eighth annual report on average student loan debt in the U.S., which found that college graduates who borrowed for bachelor's degrees granted in 2012 had an average student loan debt of $29,400 -- the highest average student loan debt on record.
"The graduates of 2012 left school and entered repayment at a time of high unemployment," said Debbie Cochrane, research director at the institute. "In many ways, these graduates were hit from both sides.
"They went to college during a recession when their family's ability to pay for college was likely reduced. Now they are graduating from college and may be experiencing substantial challenges getting a job to repay the loans."
PG graphic: Cumulative debt for bachelor's degree recipients
(Click image for larger version)
The report pointed out that seven in 10 college seniors who graduated last year had student loan debt.
Average debt was even higher for graduates of Pennsylvania colleges in 2012 -- $31,675, according to the institute, which also is home to the Project on Student Debt.
"Pennsylvania is a high debt state," Ms. Cochrane said.
Pennsylvania ranks third in the nation in terms of highest average student loan debt and fourth in the nation when it comes to the share of college graduates who have student debt.
Ms. Cochrane said 70 percent of graduates from Pennsylvania public and nonprofit colleges have student loan debt. By comparison, only 41 percent of students graduating from Nevada colleges have student debt. New Mexico college graduates have the lowest average student debt -- just under $18,000.
Typically, Ms. Cochrane said, public college graduates have less student loan debt than those who attended private colleges, and they are also less likely to have student loan debt.
"The opposite is true in Pennsylvania. From what we can see, public colleges in Pennsylvania are relatively expensive compared to public colleges elsewhere. And there's less grant aid available to Pennsylvania students in public colleges."
Another organization that tracks college debt, used different research methods, but had similar findings.
Mark Kantrowitz, senior vice president and publisher of Las Vegas-based Edvisors.com, said he found the average student loan debt for 2012 college grads nationally was $30,000.
He said his method doesn't produce college specific data, but it does provide a statistically significant national average.
And the 2012 number shows debt on the rise.
"This is the highest figure so far," he said. "Average student debt is going up about $1,000 per year. I predict it will continue to go up.
"The primary driver is a failure of grants to keep pace with increases in college costs."
Mr. Kantrowitz said his figure for average debt is slightly higher because he uses a national survey of students that is statistically representative to get an overall average amount of student debt. The Institute for College Access & Success average debt figures are based partly on data that is voluntarily reported by colleges. Colleges with the highest student debt are least likely to respond to the survey. The institute also uses data from the U.S. Department of Education to reach the average debt figures that it has reported for the past eight years.
Mr. Kantrowitz said the student loan default rate has risen from 6.7 percent five years ago to 10 percent.
The main reason for defaults is when a student borrower fails to complete his education. "People who drop out are four times more likely to default," he said. "Of people who default on loans, two-thirds of them are college dropouts.
"So, it's important if you go to college that it's the right thing for you and you're at the right school."
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