Debt for College Grads Averages $25K; Unemployment Climbs
The latest numbers are out today from the Project on Student Debt at the Institute for College Access & Success, and they're not encouraging.
Along with their degrees, two-thirds of seniors left college owing an average of $25,250 in student loans5 percent more than a year ago. Unemployment for the class of 2010 was 9.1 percent, up from 8.7 percent in last year's report. Discouraging, but better than the unemployment rate of 20.4 percent for young adults with only a high school diploma.
Debt levels by state show graduates form the Northeast and Midwest had the highest average debt, likely because of the concentration of private, nonprofit colleges in those areas. Students in New Hampshire had the highest average debt of $31,048, followed by Maine at $29,983 and Iowa at $29,058. That contrasts with the West, where students borrowed the least and the average debts were $15,509 in Utah, $15,550 in Hawaii, and $16,399 in New Mexico. The report also highlights specific high-debt private nonprofit and public colleges.
The Project on Student Debt wrote about the risk of private loans this summer, and today's report includes data for the first time on this growing sector of the student-loan market. Nearly one-third of college graduates took out a private loan to finance their education, and the average amount is $12,550. Private loans made up 22 percent of all student-loan debt for the class of 2010.
Unlike federal loans, private loans typically have uncapped variable interest rates and don't have the same consumer protection such as income-based repayment and loan forgiveness. (Last week, President Obama accelerated the improved terms of student-loan repayment.) The majority of undergraduates who take out private loans have not maxed out the safer federal student-loan option, according to The Project on Student Debt.
This report does not include borrowing patterns for students at for-profit institutions, because few release the data. Information provided to the federal government shows that 96 percent of graduates from for-profit schools have student-loan debt. The report does note that 64 percent of students at for-profits had a private loan.
How can the country turn around the increasing reliance on student borrowing for higher education? The Project on Student Debt recommends increasing access to need-based student aid, requiring schools to certify or sign off on private loans to make sure students are taking them out only when necessary, and expanding the collection of student-debt data to better track trends beyond first-time, full-time students.