The Hechinger Report - A 56 percent increase in student debt

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By Delece Smith-Barrow

Few college students can pay for their education without using federal loans, but as we’ve seen in recent years, paying back student loans can be overwhelming and financially draining. There are a number of reasons for the more-than-$1.6 million student debt crisis, but a new report from The Institute for College Access and Success highlights one of the most glaring: inflation.

The average debt for college graduates from nonprofit institutions grew by about 56 percent between 2004 and 2019, but inflation between that time period grew 36 percent, according to TICAS. And the challenges of student borrowing are likely to become worse as students and families have less money available to pay for school.

“There’s no one single driver of student debt levels,” said Debbie Cochrane, the executive vice president for TICAS, a research and advocacy group. Part of the reason the amount of debt students carry has skyrocketed is college costs, which often depend on how much or how little states allot for higher education in their budgets.

“States over time have pulled back their support on a per-student basis,” said Cochrane. When policy makers want to trim a state’s budget, higher education is an attractive option, she said.

“You can’t charge your elementary school students tuition, but you can charge college students, if there’s not enough resources to go around,” Cochrane said.

In some states, the growth of average student debt is alarming. Between 2004 and 2019, when the average debt should have inflated by 36 percent to match the overall inflation rate, it grew 107 percent in New Jersey, 100 percent in Pennsylvania and 95 percent in Massachusetts. Not surprisingly, the cost of going to college at many institutions in those states rose sharply.

At Drexel University in Philadelphia, the average debt for graduates tripled between 2004 and 2019. Students from the class of 2019 who borrowed had an average debt of $72,900 – the highest reported by any college in the nation.

For some borrowers, local governments may help relieve their debt.

For example, in January, Colorado legislatures introduced a bill for a Get on Your Feet Student Loan Repayment Assistance Program that would cover up to 24 monthly payments for qualified borrowers. New York introduced a similar program in 2015.

“We’ve started to see states become more and more active in trying to tackle the student debt crisis,” said Seth Frotman, executive director of the Student Borrower Protection Center.

And since 2015, at least 15 states have adopted a bill of rights for student borrowers, which increases their authority to oversee how student loan servicers are working with borrowers, according to a report released this week from the Student Borrower Protection Center. California Governor Gavin Newsom approved legislation for a student loan borrowers’ bill of rights in September.

Even with recent state-sponsored programs to help student borrowers, limiting and paying down debt will be challenging during the pandemic. The U.S. unemployment rate is 7.9 percent, but it was 3.5 percent at this time last year. Many students and families are unemployed or underemployed, making college costs harder to bear.

“The same populations that we know are being devastated by Covid and the subsequent economic fallout are the same ones that have been hit the hardest by the student debt crisis,” Frotman said. Black and Latino borrowers are being hit especially hard, he said.

In recent years debt levels had begun to flatten, “but the onset of Covid-19 puts those gains in jeopardy,” said Cochrane.

How can state governments decrease the burden of student debts? How can colleges and universities make their institutions more affordable? Email or tweet me your thoughts.

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The Hechinger Report - A 56 percent increase in student debt

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