In Study, Most Graduates’ Debt Load Is Manageable

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By TAMAR LEWIN
NYT, August 12, 2009

About a third of all students who earned bachelor’s degrees in 2007-8 graduated with no debt at all, about the same share as in the 2003-4 academic year, 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. 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.
Over all, for all kinds of degrees and settings, 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 in for-profit colleges, and for students 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, compared with 2003-4, a 30 percent increase. And bachelor’s degree recipients in for-profit institutions had a median debt load of $32,653, up 23 percent from $26,562 four years earlier.
For-profit colleges, which have grown rapidly over the last decade, acquire much of their revenue from federal aid. According to the authors of the policy brief, the for-profit colleges had about 7 percent of the nation’s undergraduates in 2006, but received about 19 percent of the federal Pell grants.
For those earning bachelor’s degrees in public or private colleges, borrowing did not increase much. 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.
Typically, the report said, those earning certificates or associate degrees accumulate about half as much debt as those earning four-year degrees.
With the recession, the authors said, student borrowing may be quite different in the next study.
“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 completed 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, with many of them borrowing through both routes. Full-time students who borrowed received an average $7,809 from private sources and $5,432 in federal student loans.
“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.”