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Report Shows Typical College Graduate’s Debt Increases, but Slowly
A recent College Board policy brief titled “How Much Are College Students Borrowing?” analyzes information about students who graduated in 2007-08 with an associate or bachelor’s degree or a certificate to determine their postgraduate loan obligations. The brief prepared by College Board policy analysts Patricia Steele and Sandy Baum, shows that although 41 percent of students graduated with no debt, the percentage graduating with debt had increased from 54 percent in 2003-04 to 59 percent in 2007-08. These new data from the U.S. Department of Education’s National Postsecondary Student Aid Study indicate that a growing number of graduates are leaving college with excessive debt. About 10 percent of all bachelor’s degree recipients last year borrowed $40,000 or more, and the proportions were much higher at private and for-profit institutions.
“The analyses examine the borrowing decisions students and families are making,” said College Board President Gaston Caperton. “We are committed to working with our member colleges and universities and policymakers to create a financial aid system that will help a new generation of students, especially low- and middle-income students, pay for college without unmanageable debt.”
In 2007-08, 39 percent of all students and 54 percent of all full-time students took out an education loan. More than 90 percent of students at for-profit institutions borrowed, compared to less than one-quarter of those attending two-year public colleges. Students in the for-profit sector were also much more likely to rely on private loans, which do not carry the repayment protections of federal loans and generally have higher interest rates.
“Many students borrow at some point in their college careers, but not every year,” said Baum. “Borrowing moderately is a responsible way to pay for college, but students should consider how much they can expect to earn when they graduate and whether they will be able to afford the required monthly payments.”
Between 2003-04 and 2007-08, median debt increased more than $6,000 among students who earned bachelor’s degrees at for-profit institutions, compared to an increase of about $700 for those earnings bachelor’s degrees at public colleges and universities. Median debt levels also increased significantly for those earning certificates at both public two-year and for-profit institutions.
Sixty-six percent of bachelor’s degree recipients graduated with debt in 2007-08, including 62 percent who had federal loans and 33 percent who had borrowed from nonfederal sources. The median debt level of bachelor’s degree recipients who borrowed at public four-year colleges was $17,700 — increasing 4 percent in inflation-adjusted dollars in four years. The median debt level of 2007-08 bachelor’s degree recipients at private four-year institutions who borrowed increased 5 percent to $22,375 during the same period.
Patricia Steele, coauthor of the policy brief and an analyst at the College Board, said, “There is reason to be concerned about those who borrow far more than the average amount. Students who complete a degree with excessive debt face burdensome repayment obligations.”
“How Much Are College Students Borrowing?” is available online.
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