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 the need to borrow:
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