Wednesday, December 4, 2013

The Demographics of Student Debt

Rising student loan debt has become a huge issue in the United States, and so it was very interesting today to see the results of a new survey from "The Project on Student Debt" of the Institute for College Access and Success. I actually picked up on the story from the Huffington Post, but the Institute's website gives you the data from their survey state by state and college by college. The biggest surprise seems to be the wide variability in student debt. Some of the differences are obvious: private schools are more expensive than public schools, so the debt load for students tends to be higher--although there are exceptions like Princeton University. Indeed, the report notes that colleges with strong endowments are more likely to provide scholarships which reduce the need for student loans. The report also indicates that very few private for-profit schools responded to their survey, but those few that did had higher than average student debt among their recent graduates. The expectation is that these schools are disproportionate contributors to the increasing student loan indebtedness.

The geographic variability was also quite amazing: 

State averages for borrowers’ debt at graduation in 2012 ranged from $18,000 to $33,650. High-debt states remain concentrated in the Northeast and Midwest, with Delaware the
highest. New Hampshire, Pennsylvania, Minnesota, and Rhode Island also had average debt over $30,000. Low-debt states were mainly in the West and South, with New Mexico the lowest. Other low- debt states include California, Arizona, Nevada, and Wyoming.
Since these averages include both public and private nonprofit institutions, it is not clear why there is such regional variability, but the data seem to suggest that you should "go west" for college!

Sadly, the single biggest reason for the rise in student debt is almost certainly the fact that state support for higher education in the US has not kept up with the increasing demand for a college education. This means that students who are admitted to public universities are paying an ever higher proportion of their educational expenses because taxpayers keep cutting back on support, and since the support doesn't exist to open new public campuses to meet demand, students are forced to go to more expensive private institutions, either non-profit or for-profit, even if they can't really afford them. 


…and who can't resist The Onion's story about student debt: 
Man Doesn’t Know How Parents Ever Going To Pay Off Massive Student Loan Debt

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