The Unforgiven: How College Debt Is Crushing a Generation

When will students and recent college graduates shake off the burden of increasingly higher student debt and demand a system that serves them instead of making them servants?

The amount of personal debt being accrued by college students in the nation’s private and public colleges continues to rise at shocking rates with current graduates of four-year schools exiting with a national average of nearly $30,000 in loans to repay, according to a new report released Thursday.

“To put it bluntly, there is no fiscal reason why the U.S. student debt crisis should exist.”
—Raúl Carrillo, Modern Money Network

Using available data from private non-profit and public schools in all fifty states for the 2013 academic year, the Project on Student Debt at The Institute for College Access & Success (TICAS) found that the level of debt varies from state to state, but that of the nearly 70 percent of graduates who take out a loan to pay for colllege, the burden continues to grow.  According to the report (pdf), the average bachelor-degree graduate—along with a diploma of increasingly questionable value— leaves school with and an average of $28,400 in personal debt. That number is a full 2 percent increase over 2012.

Notably, for-profit colleges—which have been widely criticized for burdening vulnerable students with out-sized private debt—were not included in the TICAS report because those schools nearly universally decline to share their student loan and debt figures with the public.

Among the schools that were covered, however, there was clear variation in the level of student debt depending on the college itself and its geographic location.

At nearly 20 percent of colleges, the report showed, average debt levels for students increased by 10 percent or more over the previous year. As in 2012, about 20 percent of all new graduates’ debt was in private loans, which are typically more costly and provide far fewer consumer protections and repayment options than safer federal student loans. The rate of debt also varied between states. “At the state level,” the report reads, “borrowers’ average debt at graduation ranges from $18,656 to $32,795, with six states topping $30,000 and only one under $20,000. Nearly all the highest debt states are in the Northeast and Midwest, with the lowest debt states in the West and South.”

In a separate but related study released on Wednesday, new research and polling that focused on the financial burdens of higher-education among recent college graduates—titled Millennials & College Planning—found that today’s students are increasingly “having to let finances dictate their futures.”

“One-third of those with student loans are shelling out over $300 per month and five percent are actually paying more than $1000 per month.”

The report, coordinated by Junior Achievement USA and PwC US and prepared by New York-based research firm YPulse, found several key trends among recent graduates (aged 18-29), including:

• For 60 percent of Millennials, financial aid is a deciding factor in their school choice. Among those not attending their first choice school this year, 62 percent said it was because they couldn’t afford it.
• College tuition and loans top the list of money matters that are worrying Millennials ages 18-29, with one in five (21 percent) claiming it as their family’s main financial problem.
• One-third of those students with loans are shelling out over $300 per month and five percent are actually paying more than $1000 per month.
• Nearly one-in-four Millennials (24 percent) believe their student loan debt will ultimately be forgiven.

Though told by society that the key to a bright and prosperous future is largely dependent on getting a degree, the new generation is becoming increasingly skeptical of that claim. According to the authors of this report: “While high school graduates are hard-pressed to find gainful employment with just a diploma, we see a new Catch-22 emerging: As the number of people attending college increases, the value of its education decreases. Some Millennials say ‘a four-year college degree isn’t as valuable as it used to be,’ but continue with their higher education in order to have a real chance in the job market.”

And though the survey section of the report, as noted, asked graduates about the idea of loan or debt “forgiveness,” the report itself does not delve into the issue with any detail.