Student Debt and the Class of 2013

By Elizabeth Blume

The Institute for College Access and Success published its ninth annual report on the cumulative student loan debt of recent graduates from four-year colleges. Their analysis shows that debt levels are up two percent from 2012 from $27,850 on average per borrower in 2012 to $28,400 in 2013 and that seven in ten (69%) seniors who graduated from public and private nonprofit colleges had student loan debt. For-profit college graduates were found to be 29% more likely to have loans than graduates of public and nonprofit private institutions and, on average, owed 43% more than their other peers.

Among the primary findings of the report:

  • State averages for debt at graduation from public and private nonprofit colleges ranged widely, from $18,650 to $32,800. High debt states are concentrated in the Northeast and Midwest. Low debt states are primarily in the West and South.
    • Included in the report is an interactive map with details for all 50 states, the District of Columbia, and more than 1,000 public and nonprofit four-year colleges.
  • Among those institutions who contributed data to the report (over 1,000) average debt ranged from $2,250 to $71,350 and the percentage of students with debt ranged from 10 percent to 100 percent.
    • The 20 highest debt public colleges have an average debt range from $33,950 to $48,850. The 20 highest debt private nonprofit colleges have an average debt range from $41,750 to $71,350.
  • The report makes five policy recommendations to reduce the burden of student debt:
    • Reduce the need to borrow:
      • Increase Pell Grants by doubling the maximum amount and covering a higher share of costs for low-income students; and
      • Prevent state disinvestment by ensuring that new federal dollars supplement, rather than supplant, state and local education funding.
    • Help keep loan payments manageable by simplifying and raising awareness of income-based repayment plans:
      • Replace the multiple income-based repayment plans currently available with a single plan that caps payments at 10% of income and offers loan forgiveness after 20 years of payments;
      • Raise awareness of repayment options through continuous outreach to borrowers showing signs of financial distress;
      • Help students and families make informed choices by providing them with clear, timely, accurate and comparable information for college decision-making;
      • Allow the Department of Education to collect data directly from private lenders;
      • Authorize the Department of Education to collect data on private loan borrowing from colleges via the Integrated Postsecondary Education Data System (IPEDS);
      • Allow students to apply for aid earlier using tax data available; and
      • Provide better consumer information to parents and students through improved College Scorecards, Shopping Sheets, Net Price Calculators and loan counseling.
    • Strengthen college accountability by rewarding colleges that reduce student borrowers’ and taxpayers’ risk:
      • End federal financial aid eligibility for the worst-performing colleges;
      • Require that colleges with large amounts of student debt share the financial risk;
      • Reward colleges with low debt levels; and
      • Encourage increases in the enrollment of low income students.

Reduce risky private loan borrowing by requiring school certification of private loans, creating a market for refinancing private loans, restoring fair bankruptcy treatment for private loan borrowers, and encouraging community colleges to participate in the federal loan program