The collegiate Class of 2013 continued to pile up huge debt like its predecessors, with the average student graduating $28,400 in the hole.
But California students fared second best in the nation, owing just $20,340, according to The Project on Student Debt (pdf) study by the Institute for College Access & Success. Researchers limited their study to public and nonprofit colleges that offered four-year degrees, because virtually all for-profit schools refused to divulge their graduates’ debt.
California finished behind New Mexico ($18,656), and ahead of Nevada ($21,666), District of Columbia ($22,048), Oklahoma, ($22,174), Arizona ($22,253), Utah ($22,418), Hawaii ($22,785), Wyoming ($22,879) and Louisiana ($23,358).
The high-debt states were led by New Hampshire ($32,759), followed by Delaware ($32,571), Pennsylvania ($32,528), Rhode Island ($31,561), Minnesota ($30,894), Connecticut ($30,191), Maine ($29,934), Michigan ($29,583), Iowa ($29,370) and South Carolina ($29,092).
The report pointed out that college debt is influenced by a number of factors, including “student demographics, state policies, institutional financial aid packaging policies, and the cost of living in the local area.” California students are helped by strong financial aid resources, like Cal Grants.
A couple of other recently released reports, by the College Board, paint a similarly ugly picture of indebtedness, but offer a glimmer of hope for the future. The College Board found that the pace of increase in tuition has slowed and the size of new annual student debt is declining. But the dip in indebtedness may be due to a government crackdown on for-profit colleges, which the College Board included, and an uptick in the economy that encouraged workers to stay on the job rather than return to school.
Fifty-five percent of California students graduated with debt, which tied it for 36th place, according to the Project on Student Debt. No California schools made the Top 20 list of high-debt public colleges and universities, where student debt averaged between $33,950 and $48,850. Pacific Union College made the Top 20 list of private nonprofit schools, where debt ranged between $41,750 and $71,350.
The report is littered with disclaimers warning that the figures presented are flawed and perhaps not all that accurate. Schools aren’t required to report student debt, so the researchers relied on voluntary reports from about half of the qualifying private and nonprofit colleges, representing 83% of all students who attend those types of schools. Those schools that voluntarily reported data may also have underestimated the debt because they don’t include transfer students and might not be aware of some of the private debt.
However, what is known is that outstanding student debt is $1.2 trillion nationally, of which $150 billion are private loans (as opposed to government loans, mostly federal). That’s about 12% of the loan debt, but could be rising. The report said that 20% of loans carried by the Class of 2013 were private.
The ramifications of this kind of crushing debt are obvious. People graduating from college and entering the job market with low pay and big student debts have substantially less money to pay for housing and big ticket items like cars. That has a multiplier effect on the economy and upends traditional patterns of family and career development.