The class of 2014 graduated with an average debt of $28,950, the highest level since the Institute for College Access & Success began tracking student debt 10 years ago. Over that time, average student debt has grown by 56%, according to a new report by TICAS.
“It’s important to look under the hood and see what’s really going on,” says Lauren Asher, president of TICAS. “One of the big factors [driving up student debt] has been state disinvestment [in higher education]. More of the costs of higher education are now being passed on to students and families.”
Over the last decade (and especially in the years following the 2008 financial downturn) the share of funding public colleges received from states has declined from 62% to 51%, while funding from families (in the form of tuition and fees) has risen from 32% to 43%. Meanwhile, tuition has risen nearly 30% for four-year public schools, from $6,448 in 2004 to $9,139 in 2014. TICAS’ findings are based on data submitted by 1,111 of 2,000 public and nonprofit four-year colleges in the U.S.
The range of student debt levels varies widely by state. On the low end, Utah and New Mexico each boast average debts under $19,000, compared to highs of more than $33,000 in New Hampshire and Delaware (see an interactive map of all state debt levels here.) Delaware tops the list of high debt states with an average $33,808. More than 60% of Delaware undergraduates carried debt in 2014, compared to 45% in 2004. Students there now carry more than twice as much debt as their peers in 2004, TICAS found.
Student debt exceeded $30,000 in five other states — New Hampshire, Pennsylvania, Rhode Island, Minnesota and Maine — each of which has slashed state public higher education funding by at least 13% since 2008. It’s no coincidence that the top 10 states for student debt also derive the majority of their funding from net tuition and fees (the amount families pay after accounting for financial aid and grants), according to a separate report by the State Higher Education Executive Officers.
There are other factors at play here, of course. Some states have a higher overall cost of living and more expensive labor costs, both of which can lead to rising tuition and, as a result, more student debt. And there are limitations on the data TICAS can collect. Because the study used figures provided voluntarily by schools, it doesn’t paint a full portrait of student debt. The federal government only collects this kind of data at the national level once every four years (the last report in 2012 found the average student debt load was $29,400).
What’s more, so few for-profit institutions were willing to participate in the study that TICAS couldn’t include them, despite research that shows for-profit students are more likely to borrow. Private student lenders, like banks, also aren’t required to report lending data, so TICAS’ report only looks at federal student debt.
“Even colleges that do report voluntarily may understate what their graduates owe because the data they’re asked to provide excludes transfer students, and there may be private loans the school doesn’t know about,” said Matthew Reed, TICAS program director and co-author of the report. “Because our state averages are based on what colleges report, actual state averages may be higher than they look.”
Beyond student debt
Despite the rise in student debt, it’s not all doom and gloom for college graduates: In most cases, a college degree is still a ticket to higher lifetime earnings and there are more resources available today for students struggling to pay off their loans than ever before.
Income-based repayment plans allow students with federal loans to extend the amount of time they have to pay them back. If you work for a nonprofit or public institution, you can qualify for public student loan forgiveness.
The government recently rolled out its College Scorecard, a website where families can easily find out how much colleges cost, how likely students are to graduate from a particular school, and how much debt they carry when they do. Families should pay close attention to net tuition price, rather than the sticker price — that’s the real price they’ll have to pay after financial aid and grants are applied.
As the race for the 2016 presidential election heats up, Asher says she’s been pleased to hear student debt and college costs frequently cited by candidates from both parties as issues that need to be tackled. More than 42 million Americans have student loan debt today.
“People are talking about student debt in ways they weren’t 10 years ago,” Asher says. “But there’s still a long way to go.”