Average Student Loan Debt Is Up...Again

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The economy might be slowly rebounding, but the student debt issue continues to grow.


Last year, more college graduates took out bigger loans to pay for school than their peers from the class of 2011, according to a new report from the Project on Student Debt at the nonprofit Institute for College Access and Success.

Here’s a quick look at the broader numbers:

- The average student debt for 2012 graduates was $29,400, up nearly $3,000 from $26,600 the previous year.


- More than 7 of 10 (71 percent) college seniors who graduated last year had student loan debt, up from 68 percent in 2008.

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(Credit: Marcos Alonso/Fusion)

Those numbers don’t tell the whole story, though:

There’s significant variation by state and type of school. In general, students at schools with higher tuition had more loans, but that was not always the case. Some schools like Princeton University offer tuition waivers to low-income students.


Average debt in some states, like New Mexico, came in around $18,000. But others, like Delaware, came in much higher, at $33,650.

A quick note about the figures:

The new national figures include data from for-profit colleges who volunteer the information. The state-by-state figures do not. Few for-profits, which have been criticized for taking in lots of students but failing to graduate many with skills needed to secure a job, offered up the figures. Only nine out of 584 for-profit, four-year, bachelor’s-granting colleges reported figures for the class of 2012, representing just two percent of bachelor’s degree recipients at these colleges in the 2011-12 year.


But according to national figures mentioned in the report, 88 percent of graduates from for-profit, four-year colleges took out loans, and they borrowed 43 percent more than other graduates.

What’s going on?

Tuition is continuing to rise but incomes are not keeping pace. Some families have had to dip into savings that were meant for college to keep afloat, forcing kids to take out loans instead. This has long-term implications - young people are putting off marriage and home ownership, for example - that you can read more about here.


Who’s to blame?

According to a new poll from Harvard University, young people blame colleges. Just 10 percent think students are at fault. In reality, students shouldn’t be immune from blame, but if we’re going to hold them accountable, they need better mechanisms for evaluating colleges and making informed decisions to take out loans in the first place.


How do we make college more affordable?

The report lays out several ideas, some of them in line with President Obama’s college affordability plan.


Right now, students and their families often consider tuition and fees when they’re looking at affordability. But they also need to consider living expenses, including things like transportation and food. Colleges have been better about posting average expenses in recent years, but there’s still a long way to go before most students can really get a clear sense of how much they’ll be spending and, consequently, how much debt they’ll need to accrue.

Students can expect some more information in the future, though. The Obama administration has just launched a new financial aid site and they’re in the process of developing a ratings system for colleges. Students need access to data about graduation rates and average debt to make informed decisions. Right now, that’s difficult to obtain. As the report indicates, for-profit colleges don’t like sharing that information and there are few mechanisms in place that compel them to do so.


The report also calls for more accountability to be placed on colleges. Students should absolutely be required to progress toward a degree, but right now, there are few provisions in place to hold colleges accountable. As part of the college affordability plan, the Obama administration would like to tie federal aid to things like graduation rates, but that will take action from Congress and it’s not clear lawmakers will be able to overcome bitter partisanship to make that a reality.

The report also suggests doubling the maximum Pell Grant, which many low-income students rely on to help fund their higher education.


Individual states could also provide a roadmap. States like Oregon are working to address the issue of college affordability and some of their moves might provide a good testing ground for how the country could tackle the growing student debt problem.

What do you think?

How would you solve the student loan crisis?

Emily DeRuy is a Washington, D.C.-based associate editor, covering education, reproductive rights, and inequality. A San Francisco native, she enjoys Giants baseball and misses Philz terribly.

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