College Costs Weighing Down A Generation With Student Debt

On Sunday, The New York Times introduced the series “Degrees of Debt,” which examines “the implications of soaring college costs and the indebtedness of students and their families.”

Regular readers of The Choice would be highly interested in this article, as it examines some serious issues we’ve covered about college affordability, student debt and the roles that students, parents, colleges and lenders have played in the issue. It explores whether student lending is the next bubble that may cause an economic collapse; the rationale behind sticker prices and the actual prices that students typically pay; misleading financial aid letters that saddle students with $42,000 in loans; responsible lending practices; and whether college is even worth the cost.

It also examines how state funding has affected college costs and, ultimately, student borrowing. Ohio State University, for example, used to receive 25 percent of its financing from the state. That was in 1990. Today, state financing only accounts for 7 percent of its budget. “The consequence? Three out of five undergraduates at Ohio State take out loans, and the average debt is $24,840,” our colleagues report.

On the issue of affordability, more college marketing companies are promoting the premise that the expense will work out in the end; they choose their words wisely and “focus on the value of the education rather than the cost,” our colleagues write.

The piece begins with Kelsey Griffith, an Ohio Northern University graduate who owes $120,000 in student debt.

“As an 18-year-old, it sounded like a good fit to me, and the school really sold it,” she said. “I knew a private school would cost a lot of money. But when I graduate, I’m going to owe like $900 a month. No one told me that.”

The report examines how, over time, student debt has become a central part of the college experience. In 1993, The Times reports, 45 percent of students who earn bachelor’s degrees had to borrow money to pay for college. Nearly everyone has to borrow now; that percentage has soared to 94 percent. The report says:

With more than $1 trillion in student loans outstanding in this country, crippling debt is no longer confined to dropouts from for-profit colleges or graduate students who owe on many years of education, some of the overextended debtors in years past. Now nearly everyone pursuing a bachelor’s degree is borrowing. As prices soar, a college degree statistically remains a good lifetime investment, but it often comes with an unprecedented financial burden.

Ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education — up from 45 percent in 1993, according to an analysis by The New York Times of the latest data from the Department of Education. This includes loans from the federal government, private lenders and relatives.

For all borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000, the Federal Reserve Bank of New York reports. Average debt for bachelor degree graduates who took out loans ranges from under $10,000 at elite schools like Princeton and Williams College, which have plenty of wealthy students and enormous endowments, to nearly $50,000 at some private colleges with less affluent students and less financial aid.

The article also includes a detailed interactive chart that shows the increasing levels of student debt at colleges and universities around the country. The data go back to 2004 and allow users to customize the chart using a number of factors, including enrollment size, share of graduates with debt, graduation rates, and whether the school is public or private. It also provides data for a particular college or university, and displays your debt level, adjusted for inflation.

There has been overwhelming response to the piece, and our colleagues hope to hear from more readers about their experience with college loans, for future reporting for the series. Several experts have also weighed in on how, exactly, to control the rising levels of student debt and protect young borrowers from such big financial burdens. In a Room for Debate piece, experts weigh in on loan collection policies, controlling college costs, government spending, “reckless” for-profit colleges and better lending practices.


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