Study Shows Rise in Average Borrowing by Students

Although about a third of the students who earned bachelor’s degrees in 2007-8 graduated with no debt, nearly the same as four years earlier, the average amount students borrow has increased, according to a policy brief released Tuesday by the College Board.

“People think students are drowning in debt, and there is a small proportion of students that borrow an exorbitant amount, but most students graduate with a manageable debt load,” said Sandy Baum, an author of the brief.

For bachelor’s degree recipients who did borrow, the median loan debt was $19,999, up 5 percent from $18,973 four years earlier, adjusted for inflation. The data, the latest available, come from the federal Department of Education’s National Postsecondary Student Aid Study, which is conducted every four years.

About 6 percent of those who completed a degree or certificate — and 10 percent of those who received a bachelor’s degree — borrowed more than $40,000, the brief said.

But the brief does not include parents’ borrowing, credit-card debt, informal loans from relatives or friends, or loans for graduate school.

“We are asking people to bear more and more of the cost of higher education through borrowing, since neither state spending, need-based aid, or family incomes have kept up with the costs,” said Lauren Asher, president of the Project on Student Debt, a nonprofit research group. Borrowing varied greatly depending on the type of school attended. For example, 98 percent of those who got degrees at for-profit two-year colleges had an education loan, compared to 38 percent of those who attended public two-year colleges.

Over all, the median student loan debt of borrowers in 2007-8 was $15,123, up 11 percent from $13,663 in 2003-4. But debt levels rose far more sharply for students at for-profit colleges, and those earning certificates and two-year degrees.

For example, students who received certificates in a for-profit program carried a median debt load of $9,744 in 2007-8, a 30 percent increase from 2003-4. And bachelor’s degree recipients in for-profit institutions had a median debt load of $32,653, up 23 percent four years earlier.

For-profit colleges acquire much of their revenue from federal aid. The authors of the brief say for-profit colleges had about 7 percent of the nation’s undergraduates in 2006, but received about 19 percent of the federal Pell grants.

Borrowing did not increase much for those earning bachelor’s degrees in public or private colleges. At private four-year colleges, the median loan debt for bachelor’s degree recipients was $22,375 in 2007-8, up 5 percent from $21,238 four years earlier.

“How much debt is too much depends on circumstances you can’t predict when you’re planning for college, like the economy, your health, and whether the field you’re training for will continue to expand,” Ms. Asher said.

Given the recession, the next debt study may paint a grimmer picture. “Of course, everybody is struggling much more,” Ms. Baum said. “And private student loans are less available, now that a number of banks that were making those loans are no longer making them, or no longer in business.”

Over all, 41 percent of the students who earned a degree or certificate in the 2007-8 academic year — and 34 percent of those who received bachelor’s degrees — graduated with no debt.

According to the brief, 50 percent of all full-time students took out a federal loan in 2007-8, and 19 percent took out private loans, many of them borrowing through both routes.

“It’s important for students to remember the difference between federal and private borrowing,” said Patricia Steele, the other author of the brief. “Private borrowing gives you no protection, no forbearance, no income-based repayment.”


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