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Study: Not all students are deep in debt
A graduation cap with money symbolizes student loans
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TEXT OF INTERVIEW
TESS VIGELAND: We've been hearing for the last couple of years that along with all their other things, students are also packing a ginormous debt burden as they head off to school. Tens of thousands of dollars in loans that will haunt them for decades after they graduate.
It's true -- but only for a small minority of the student population. So says a study out this week, co-authored by Patricia Steele, a policy analyst at the College Board. I told her the findings seemed counterintuitive.
Patricia Steele: That's a perfect word. It's true, everyone is worried about the rising price of college and everyone is worried about college debt. You can hardly say that all students are buried in debt. 34 percent of those who finished a bachelor's degree, in our study in '07-'08, had no debt at all. The two-thirds that did borrow, about half of them borrowed less than $20,000.
Vigeland:Are there instances where there is outrageous borrowing going on?
Steele: Absolutely, there are these students who are borrowing excessively. They're borrowing in the private market, loans that don't have interest rates legislated by Congress, they don't have economic hardship provisions and they don't qualify for federal income-based repayment loan plans.
Vigeland: You also broke this out based upon what type of school -- two-year versus four-year, public versus private versus for profit. Can you give us a bit of a breakdown of depending what kind of school these students are going to, how much they're having to borrow?
Steele: On average among those students that borrow, the median debt level for an associate's degree recipient is $7,000.
Vigeland: So this would be for example, a community college.
Steele: That's right. And for a bachelor's degree in the four-year public sector, it's a little lower than the median, $17,700. Where we're seeing really high, excessive borrowing is in the for-profit sector and this is also the sector where we've seen a big increase in borrowing in the last four years, since the data was released.
Vigeland: Now this would be the so-called "career colleges," like DeVry, Kaplan, places where you go to get a specific kind of training?
Steele: Right. Those institutions, as well as smaller for-profit institutions.
Vigeland: And what are those students graduating with?
Steele: It looks like for a bachelor's degree, $32,650. And in associate's degree in the for-profit, $18,800.
Vigeland: Can you give me some sort of sense of why the conventional wisdom seems to be that college graduates are entering the work force with tens of thousands of dollars to pay off?
Steele: Well, there certainly are students who fit that description. Among all students, 12 percent are borrowing over $30,000 and this is just for their first degree. I think that the discussion focuses on those students a lot and it makes it seems as though that's all students.
Vigeland: Do you worry at all that potential students will hear that college is too expensive, that they're going to graduate with unmanageable debt loads to the point where they don't apply?
Steele: Yes, I think it is. And I think it's very unpopular to point out this reality that not all students are buried in debt. And I feel as though this is an important message to bring forth, because otherwise, low-income students hear this message over and over again about excessive borrowing and they fear that college is beyond them, that they cannot afford the price.
And there still are institutional options that are reasonable. You can both save for it, you can work throughout it and borrowing a small reasonable amount of debt that comes from federal sources, with good interest rates is still a wise investment when you're talking about your future human capital.
Vigeland: Patricia Steele is a policy analyst with the College Board and co-author of the policy brief "How Much Are College Students Borrowing?" We'll have a link to that on our Web site. Patricia, thanks so much.
Steele: Thank you so much.
I too found the story rather lacking. Mainly because the "analyst" didn't seem to do a good job with study. Nowhere in the story is there mention of credit cards. That's what students use to supplement the gap that loans don't cover. A real study would have included that debt, or at least stated why cards were not included. And Ms Vigeland, shame on you for not asking that question.
I found the program lacking in so much. Information very suspect. Its findings altogether unlikely. I Have two college graduates and their debt load is outrageous. They are effectively in debtors prison without any recourse. Maybe another study should be undertaken.
Tess Vigeland, normally a fine reporter, missed some very important questions in this interview. When the College Board representative made little of debt nearing $20K, Ms. Vigeland breezed right by the obvious, giving a total pass to the College Board. The obvious would be to ask why $20K has been deemed a reasonable amount of debt for a 21 or 22 year old. How many years, given the interest, does it take most students to pay off this purportedly reasonable debt? And what is the total they end up paying, on average? Engineering, nursing and accounting majors can reasonably count on efficient repayment, but what about English, journalism, French, sociology, history and such majors? Not every student does a career oriented degree, nor should they have to. Neither should they be hostage to debt that makes the unpaid internships and other low-paying types of career exploration virtually impossible after college. I think listeners look to Marketplace to more diligently uncover the full picture. I look forward to more thorough coverage of this issue. Thanks!
Firstly, how disinterested is the College Board in the fact that some students are not deep in debt? Not at all, I'd say.
I'm a college graduate in my 30s carrying thousands of dollars in student loan debt. Anecdotal evidence--from my friends and people I know--indicate they are also up to their necks in student loan debt. This is because the costs of college have risen so. My mother, who's 65, could actually work her way through school; that is, pay for school with her job. It's not like that anymore.
I would advocate forgiving student loan debt. So many students don't make enough to repay them. What if, instead of trying to eke out payments on loan debt once they earn $30,000+ (believe me, for some folks my age, this is still an aspiration), they could save that money toward a house payment? Why not bail out student loan debtors? That's much more honestly come by.
I don't know where you got these stats from but they are not accurate. As a parent of 4 kids, 1 who just graduated last december and 1 who is a senior this fall, Many students are graduateding with upwards of 60k or more in debt. It is sad that tuition rates have increased so much and yet income is down. we are not able to help with money for college, we have trouble just paying our bills. iF you don't have a college degree finding a JOB that pays a fair wage is almost impossibe to find. Just finding any job is very difficult.
I don't kniw where these kids you talk about are getting money to pay for college, if anyone knows please let me know!
I feel passionate that employers and students should recognize that not all jobs require post highschool education. A highschool diploma should mean that a person is qualified in basic education and analytical skills. Employers used to mentor their choice of highschool graduates to fit into appropriate roles.
Notice I use the word "should" defined as "ought to but not necessarily will be". During my lifetime, I've seen the highschool diploma become worth less.
I've listened to and participated in discussions about reclaiming the highschool graduate status. I teach undergraduates.
The study is great to have, but the the thresholds are wrong. The guest suggests that it is only those with $30,000 or more in debt that are "overburdened"/. My parent had done well in life, but a layoff and illness in the family reduced their funds to zero during my second year at school. I went with the Stafford undergrad loan amounts and attended a public school with the in-state tuition rate. I found a good job out of college in my field Landscape Architecture only to see the workforce reduced by 20%. My pay has also been reduced by about 20% for the rest of the year. My point is that a student with just $5,000 or $10,000 in student loan debt will be far away from getting the money together for a mortgage. So.. 30% don't have debt - true we do not need to worry about them - their parents have down well in life and can pass it on. 12% go to over $30,000 - part of america's great healthcare system the in between matters. the kids who do not complete school, because they do not want more debt need help. Your commentator said that kids are being resourceful and getting jobs to help. Well... Do we want students to learn or do we want to give them another giant distraction, so that our lattes come from someone who hasn't read any of the books required for their literature, business, math, AND engineering classe? From speaking to many of a prior generation I can tell you that school from K-12 to undergrad, grad and beyong has changed. You will be hard pressednot get your money's worth out of school while working.
It's wonderful that a study is being done on the reality of college debt. What I found missing was given that we know of the massive increase in college costs is where have the students gotten the money if not from loans? Most, I would expect, has come from parents. Given this, the concern expressed for low-income borrowers who may not have this outlet, seems to not look deep enough. I'd like to see the study go deeper.
