It’s the latest snapshot of the growing burden of student debt and it’s another discouraging one: Two-thirds of the national college class of 2011 finished school with loan debt, and those who borrowed walked off the graduation stage owing on average $26,600 – up about 5 percent from the class before.
The latest figures are calculated in a report out today by the California-based Institute for College Access and Success (TICAS) and likely underestimate the problem in some ways because they don’t include most graduates of for-profit colleges, who typically borrow more than their counterparts elsewhere.
Still, while 2011 college graduates faced an unemployment rate of 8.8 percent in 2011, even those with debt remained generally better off than those without a degree. The report emphasized research showing that the economic returns on college degrees remain, in general, strong. It noted the unemployment rate for those with only a high school credential last year was 19.1 percent.
“In these tough times, a college degree is still your best bet for getting a job and decent pay,” said TICAS President Lauren Asher. “But, as debt levels rise, fear of loans can prevent students from getting the education they need to succeed. Students and parents need to know that, even at similar looking schools, debt levels can be wildly different. And, if they do need to borrow to get through school, federal student loans, with options like income-based repayment, are the safest way to go.”
The latest figures come at a time of increasing alarm about the sheer scope of student debt nationally, which by some measures has surpassed $1 trillion. Recent government figures show nearly 10 percent of borrowers of federal student loans in the most recently measured cohort had already defaulted within two years of starting repayment.
The issue has come up on the presidential campaign trail, though the candidates’ specific plans haven’t become a major issue. President Obama has touted his record of ending $60 billion in subsidies to private lenders, directing the savings to student aid and implementing an income-based repayment plan that caps federal student loan payments at 15 percent of income and forgives repayment after 25 years.
Former Massachusetts Gov. Mitt Romney, his Republican challenger, argues the flood of federal student aid spending unleashed in recent years has led colleges to raise tuition prices. He wants to return to a system in which the government supports private lenders, arguing it’s more cost-effective, and his campaign has called the income-based repayment program flawed.
The latest TICAS report also cites studies that found more than one-third of recent graduates were in positions that did not require a degree, depressing wages, though other government figures cited by Georgetown University’s Center on Education and the Workforce put the so-called “underemployment” rate for young college grads much lower – at around 10 percent.
As for those who have no job at all, according to Georgetown, the latest monthly unemployment figure for college graduates under age 24 is 10.5 percent (the figure typically jumps each spring as a new class graduates and declines over the course of the year; last March it was 5.4 percent).
“Increasing student debt in a weak economy can be a knock-out blow to many considering college,” said Rich Williams, higher education advocate with U.S. Public Interest Research Group, which advocates for students. “As our economy is recovering, lawmakers must send every signal that college is a good investment.”
Among other finding in the TICAS report:
• Private (nonfederal) student loans, which generally have weaker borrower protections but have been diminishing as a source of student borrowing, accounted for about one-fifth of the debt owed by the Class of 2011.
• Debt levels vary widely by state, ranging from $17,250 in Utah to $32,450 in New Hampshire.
• Debt at individual schools ranged from $2,150 to $54,900, though not all schools report that data.
• Among colleges, the percentage of graduates with debt ranged from 12 percent to 100 percent. At 65 schools, more than 90 percent of students graduated with debt.