Breaking the Bank on Student Loans
NEW YORK ( MainStreet) The average debt that borrowers of student loans had at graduation continued to rise last year according to a new report, Student Debt and the Class of 2012 , released last week by The Institute for College Access and Success (Ticas), based in Oakland, Calif. When the members of the class of 2012 donned their caps and gowns, they were each already wrapped up in nearly $30,000 worth of student loans--$29,400 according to Ticas.
Ticas's calculations were drawn from federal data produced every four years and augmented by information colleges voluntarily reported to Peterson's College Guide, which is a part of NelNet, the Lincoln, Nebraska-based lending conglomerate and student loan servicer.
Ticas found that loan balances were up over 25% compared with the Class of 2008, whose graduates left school with an average of $23,450.
And things may be worse than they seem. The sources of data for Ticas's study were limited to institutions that voluntarily report information. What's more, Ticas said its survey could not include for-profit colleges. Those institutions were essentially no-shows when it came to data reporting. Year-to-year comparisons are problematic if a school reports one year but does not the next.
"Right now, some colleges escape accountability by opting not to report their graduates' debt, while those who do report are stuck on an unequal playing field," Matthew Reed, the principal author of the report, said in a statement. About 20% of high-debt public colleges and 30% of all low-debt colleges who reported last year did not report data this year.
Have things gotten that much worse, even for the schools who were doing comparatively well last year?
"While we cannot say why colleges that voluntarily reported debt data in the past chose to stop reporting, it underscores the limitations of voluntarily reported data and the need for the Education Department to collect this data for all colleges," the report says.
Ticas, along with other groups, has been pushing the Obama administration to collect better data on student debt. Ticas's report calls on the Education Department to collect college-level information about students' cumulative debt loads as well as private student loan borrowing.
The Obama administration is in the process of developing a ratings system that will judge colleges on yet-to-be-determined metrics aimed at measuring student outcomes and the accessibility and affordability of schools. Part of the plan is to convince Congress to tie a college's federal student aid to their performance in the ratings system with the idea that such a system will drive down costs and, in turn, reduce student borrowing.
Ticas's report ranks the average student loan balances by states and among institutions.
Delaware and New Hampshire top the chart with the highest level of debt per student, averaging $33,649 and $32,698 respectively. New Mexico had the lowest average student debt at $17,994 and California the second-lowest-debt with $20,269.