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Student Debt

Student Debt

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Student Debt

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  1. Student Debt SHEEO Professional Development Conference Seattle, August 2005 Susan ChoyMPR AssociatesBerkeley, California schoy@mprinc.com

  2. Why Student Debt Has Increased • Growth in tuition and fees has outpaced growth in median family income • From 1993–94 to 2003–04, after adjusting for inflation • Tuition at public 4-year institutions increased by 44% • Tuition at private institutions increased by 35% • Median family income (ages 45-54) increased by 6% • 1992 reauthorization of the Higher Education Act • Expanded eligibility for student aid • Raised loan limits • Introduced unsubsidized loans for all students, regardless of need

  3. Growth in Student Loan Volume(Constant 2003 Dollars) Source: The College Board, Trends in Student Aid, 2004

  4. Percent with Student LoansUndergraduates 1999-2000 2003-04 Percent 100 80 56 60 50 45 40 35 40 29 20 12 7 0 Total Public 2-year Public 4-year Private 4-year

  5. Average Amount in Student LoansUndergraduate Borrowers 1999-2000 2003-04 Average amount $10,000 8,000 6,900 6,200 5,800 5,600 6,000 5,100 4,800 3,600 4,000 3,300 2,000 0 Total Public 2-year Public 4-year Private 4-year

  6. Percent with Student Loans, by IncomeFull-Time, Full-Year Undergraduates 1999-2000 2003-04 Total Dependent students Less than $20,000 $20,000-39,999 $40,000-59,999 $60,000-79,999 $80,000-99,999 $100,000 or more Independent students 45% 45% 51% 49% 47% 42% 29% 49% 50% 46% 53% 49% 48% 48% 38% 57%

  7. Average Amount in Student Loans, by IncomeFull-Time, Full-Year Undergraduate Borrowers 1999-2000 2003-04 % Change Total Dependent students Less than $20,000 $20,000-39,999 $40,000-59,999 $60,000-79,999 $80,000-99,999 $100,000 or more Independent students $5,400 4,700 4,900 4,700 4,900 5,100 5,200 6,800 $6,200 5,200 5,400 5,700 5,700 5,800 5,800 7,500 15 11 10 21 16 14 12 10

  8. 1999-2000 2003-04 Percent with Student LoansGraduate and Professional Students Percent 100 78 76 80 60 41 40 31 27 22 20 0 Master’s Doctoral Professional

  9. 1999-2000 2003-04 Average Amount with Student LoansGraduate and Professional Student Borrowers Average amount $30,000 26,400 25,000 20,000 20,000 17,800 13,600 13,200 15,000 12,400 10,000 5,000 0 Master’s Doctoral Professional

  10. Grants vs. Loans Percent Share of Total Aid, 1993-94 to 2003-04 Source: The College Board, Trends in Student Aid, 2004

  11. Paying for College: 4-year Institutions(Constant 1999 Dollars)Full-time Dependent Undergraduates Family Grants Loans Public 4-year Private not-for-profit 4-year Average amount 24,400* $25,000 4,800* 19,400 20,000 2,000 6,800* 4,000 15,000 12,400* 10,000 2,500* 900 10,000 1,900* 1,200 13,400 12,800 5,000 8,000 8,000 0 1989-90 1999-2000 1989-90 1999-2000 *Represents statistically significant change from 1989-90.

  12. Paying for College: <4-year Institutions(Constant 1999 Dollars)Full-time Dependent Undergraduates Family Grants Loans Public 2-year Proprietary, <4-year Average amount $25,000 20,000 16,000 14,700 15,000 3,100 5,400* 1,700 10,000 8,500* 1,800 500* 7,300 200 1,100* 600 10,000 5,000 8,800* 7,000* 6,500 0 1989-90 1999-2000 1989-90 1999-2000 *Represents statistically significant change from 1989-90.

  13. Percentage of Bachelor’s Degree Recipients Who Borrowed Percent 100 80 65 60 49 40 20 0 1992-93 1999-2000

  14. Average Amount Borrowed Bachelor’s Degree Recipient Borrowers (Constant 1999 Dollars) Amount borrowed $25,000 19,300 20,000 15,000 12,100 10,000 5,000 0 1992-93 1999-2000

  15. Average Monthly Payment(Constant 2001 Dollars) Monthly payment $250 210 200 160 150 100 50 0 1994 2001

  16. Average Annual Salary(Constant 2001 Dollars) Annual salary $40,000 34,100 28,300 30,000 20,000 10,000 0 1994 2001

  17. Percentage Distribution of Loan Repayers by Debt Burden Median: 6.7 Median: 6.9 Percent 50 40 36 33 31 28 30 20 20 16 12 9 9 7 10 0 <5% 5-8% 9-12% 13-16% 17%+ <5% 5-8% 9-12% 13-16% 17%+ 1994 2001

  18. Summary • Student borrowing continues to increase, especially unsubsidized Stafford loans and alternative loans • Largest increases in percent borrowing have been at the high income levels, while the largest increases in average amount borrowed have been at the middle-income levels • Grant aid has increased, but loans once again account for a greater percentage of total aid

  19. Summary (continued) • Price increases have been absorbed by increased grants and loans rather than current family outlays • For bachelor’s degree recipients, borrowing has increased, but salaries have increased and interest rates have declined, leaving debt burden relatively unchanged

  20. For More Information L. Berkner et al., 2003-04 National Postsecondary Student Aid Study (NPSAS:2004): Student Financial Aid Estimates for 2004 (NCES 2005-158) http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005158 L. Berkner et al., 2003-04 National Postsecondary Aid Study (NPSAS:2004): Undergraduate Financial Aid Estimates for 2003-04 by Type of Institution (NCES 2005-163) http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005163 Choy, S. and Li, X., Debt Burden: A Comparison of 1992-93 and 1999-2000 Bachelor’s Degree Recipients a Year After Graduating (NCES 2005-170) http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005170 Choy, S. Paying for College (NCES 2004-075) http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2004075 The College Board, Trends in Student Aid,2004