The Facts about Student Loan Debt
Eileen St. Pierre, The Everyday Financial Planner
It can be expensive to go to college and it seems like the costs just keep going up. Taking out student loans has become the norm. We’re told this is “good debt” because college graduates will make more money over their lifetimes than those who just have a high school diploma. Here are some of the facts regarding student loan debt:
The amount of outstanding student loans topped the $1 trillion mark in 2011. Federal student loans accounted for most, about $800 billion, with the rest being private student loans.
- For 2011-2012, tuition and fees at a public 4-year in-state institution averaged $8,244. However, after subtracting financial aid, students only paid an average of $2,490.
- Depending on where you go to college, tuition and fees account for 20% (public 2-year commuter) to 68% (private, nonprofit 4-year on campus) of total college costs.
- For 2011-2012, the average total cost of attending a 4-year in-state institution and living on campus was $21,447. After tuition and fees, students paid $8,887 for room and board, $1,168 for books and supplies, $1,082 for transportation, and $2,066 for other expenses. Students may not have a lot of control over tuition and fees, but they can look for ways to control costs in these other budget categories.
- For 2007-2008 (the latest year figures are publicly available), 38% of students at 4-year public institutions had no debt. Only 12% had $30,000 or more. On the other hand, student debt at private, for-profit institutions is a much bigger problem. Only 4% of these students had no debt, and 57% had over $30,000 in student loans (these students also are more likely to have private student loans). Going to community college first and then transferring to finish your B.S. degree can pay off – 62% of students at public, 2-year institutions had no debt.
- For 2011-2012, the average loan was $6,245 for undergraduates and $17,642 for graduate students. Back in 2000-2001, the average undergraduate and graduate loans were $3,782 and $10,981, respectively.
- In 2010, the mean undergraduate balance upon entering repayment of federal loans was $12,006. The national default rate on student loans was 8.8% in 2009. This may seem high, but you would have to go back to 1997 to find a default rate that high. The national default rate peaked at 22.4% in 1990. Across all states, Oklahoma currently has the highest student loan delinquency rate at 18.5%.
- Students do not realize how many different repayment options they have. There are some repayment plans that cap loan payments at a percentage of your income and loan balances may be forgiven after 10 to 25 years depending on the plan. It’s worth asking about your options – don’t just take the default plan.
- While there have been increases in the average cumulative student loan debt, most students are repaying their federal student loans. The primary reason for passing the $1 trillion mark is the large number of students now enrolled in college. From 2005 to 2010, total full time enrollment (both undergraduate and graduate) has increased by 21%.
Students have been hit hard by the recent financial crisis. New college graduates face higher rates of unemployment and under-employment than other workers, causing student loan delinquency and default rates to go up. The best piece of advice to give to college students can be summed up in two words – Just Finish!
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