Report Describes Class of 2020 Student Debt Burden
Students are taking on more private debt than ever before, according to the Institute for College Access and Success’s new report on the Class of 2020 Student Debt Burden, with private loans now accounting for nearly 8% of all debt students. The trend is mainly fueled by an increase in private loans taken out by undergraduates.
Private student debt – which comes from loans made by banks and other private lenders and does not benefit from the protections of federal loan programs – was at an all time high at the start of the COVID-19 pandemic. Current students and graduates in repayment held about $ 136.3 billion in private student loans in March, a 47% increase from $ 92.6 billion in March 2014. And the debt market private sector increased by almost 50% between the academic year 2010-2011 and 2018-2018. 19 academic year.
“It’s not just the overall amount of student debt that matters, but also the types of debt that students incur, as some types of debt can be more expensive, have higher interest rates, and have less. protections than federal government debt, ”said Oliver Schak, research director at TICAS and co-author of the report. “We are finding that in some states, private debt can be quite common and the burden of private debt can be quite high.”
Of the top 10 states with the highest average private debt levels for the 2020 class, eight of them, plus Washington, DC, were in the northeast: Connecticut, Delaware, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island and Vermont. Seven of those states and DC were also among the top 10 states with the highest average debt levels for the 2020 class. Meanwhile, students who attended college in the western states tended to have lower private and student debt. globally.
There were also trends in the amount of student private debt depending on the type of institution they attended. Students who graduated from private nonprofit institutions tended to come away with higher private debt than those who attended public nonprofit institutions. In 39 percent of the private institutions included in the report, the share of graduates with private debt exceeded 15 percent, but the same was true for graduates of only 22 percent of public colleges. The average amount of debt borrowed by students exceeded $ 50,000 at 92 private colleges and universities, but only at three public institutions.
It is not known why the amount of private debt is increasing, Schak said, largely because private markets can be opaque and TICAS analysis relies on voluntarily reported data. Cody Hounanian, executive director of the Student Debt Crisis Center, said he viewed the data as underscoring the high cost of higher education.
“One of the important things for us is that student loan borrowers often have to use private student loans to bridge the gap between federal student loan coverage and the huge cost of a university education,” Hounanian said. “Even access to federal student loans combined with parental support, in many areas, is still not enough to pay for graduate school, and that alone should tell us that these costs have really skyrocketed and are out of the way. control.”
The report notes, however, that 53% of undergraduates who took out private loans in 2015-16 did not maximize the amount of federal loans they could use to pay for their college education. And 30% have not taken out any federal loans at all, although that percentage likely includes undocumented students, who are not eligible for federal aid.
The report shows how the overall student debt burden remained high at the start of the pandemic for a class of students who graduated with great uncertainty in the job market, Schak said. The report is based on a state-by-state analysis of the average student debt burden and, unlike in previous years, does not include national figures due to data limitations.
The share of 2020 graduates with student debt ranged from 39% in Utah to 73% in South Dakota. New Hampshire students graduated with the highest average amount of debt, at $ 39,928, while Utah students graduated with the least debt, an average of 18,344 $. Nineteen states had students with an average debt of over $ 30,000, and in six states the average amount of debt exceeded $ 35,000.
“One thing that is remarkable in terms of high level trends is that you have higher average debt in the Northeast and more borrowing in the Northeast, and less borrowing and lower debt amounts. in the west and in other states, ”Schak said. “These patterns seem to be pretty consistent over time.”
Another consistent trend is that students in public institutions tend to have a lower debt burden than those in private institutions. Of the 436 public colleges and universities reporting data, 38% said their students had an average debt of less than $ 25,000. Meanwhile, of the 664 private colleges and universities that reported data, only 18% reported average debt per student of less than $ 25,000.
For-profit institutions were not included in state averages because only 10 of the 377 for-profit colleges granting four-year bachelor’s degrees chose to report data relevant to the class of 2020.
The report made several federal policy recommendations to reduce the reliance on student debt and the debt burden of current borrowers, such as increasing aid based on need, reforming the student loan system. repayment of student loans, better protection of private borrowers and funding of public colleges in a sustainable and equitable manner.
“I think TICAS is right when they say state and local governments need to reinvest in higher education,” Hounanian said. “And we also need the federal government to step up and do its part, because we see that the federal government has a role to play as well. And when we see this type of investment from society, it takes the strain off the backs of students, parents and their families. “