July 20, 2007

Student Loan Backgrounder

As college tuition has skyrocketed students are leaving college with more and more debt. The bill passed this morning by the Senate will provide a $17 billion increase in funding for college aid to help more young people go to college. Below are just a few reasons why passage of this bill is crucial for the future of working families.

The cost of college is skyrocketing:

Since President Bush Came to Office Average College Tuition Has Increased 64%. When President Bush took office, the average in-state tuition at a public four year college was $3,164. The same tuition increased to $5,192 for the recently completed school year, a 64% increase in 6 years. [Washington Higher Education Coordinating Board, March 2007]

Tuition rose almost 6% nationally for last school year.  “The national average for tuition, fees and room and board at private four-year colleges rose 5.7 percent for the just- ended academic year, according to a report by the College Board, a New York-based nonprofit organization that oversees the SAT college-entrance exam.”   [Bloomberg, 7/3/07]

Tuition Costs Rose Faster Than Wages, Inflation or Financial Aid. “The cost of a year of college rose by about 6 percent in 2006, outpacing wages, inflation, or financial aid, the College Board reported today.”  [U.S. News & World Report, 10/24/06]

Public Tuition Rates Are Soaring. “Michigan is one of a handful of states where tuition at some public universities will increase by nearly 10 percent or more headed into the fall semester. Four-year public schools in Illinois, Colorado and Oklahoma also plan tuition increases that could at least triple the general inflation rate.” [Associated Press, 7/18/07]

Students leave school with more and more debt:

Students Borrowed $85 Billion Last Year to Pay for College, Including 20 Percent from the Private-Loan Sector. “As tuition continues to skyrocket, students borrowed $85 billion last year to go to college, nearly 20 percent from the booming private-loan sector.” [San Antonio Express-News, 6/24/07]

U.S. Students Graduated With an Average Debt of Nearly $20,000. “The average college senior graduated this year with more than $19,000 in debt.”  [USA TODAY, 6/12/06]

8% of Graduates Left With Loans of $40,000 or More, Up from Just 1.3% in 1993.  “In 2004, nearly 8% of graduating seniors carried student loans of $40,000 or more, according to the Project on Student Debt, a non-profit advocacy group. In 1993, even adjusted for inflation, only 1.3% of college seniors had debt that large, says Robert Shireman, director of the project.”  [USA TODAY, 6/12/06]

Graduate Student Debt Is Also Skyrocketing. “The average debt for graduate students at Arizona's universities is at an all-time high, and more students than ever are relying on loans. Last year, nearly half the students who earned graduate degrees owed money on student loans, with the average student carrying nearly $34,000 in debt. That is $7,000 more than a decade ago, when a third of students took out loans, according to an analysis of Arizona Board of Regents records by The Republic.” [Arizona Republic, 4/15/07]

Interest Rates Vary From 10% to 16% and Debt Accrues Over Their Time in School. “Unlike federal loans, private loans are based on the credit history of a borrower or co-signer, and interest rates vary according to the risk the bank feels it's taking. In many cases, that means the poorer you are, the higher your interest rate. That rate can range from about 10 percent, which is the average for Sallie Mae, the nation's largest lender, to 16 percent or more. The rate is not fixed and goes up and down with the market. Students don't have to pay until graduation, but interest accrues while they are in school. Private loans can't be consolidated with federal loans, can't be dismissed by bankruptcy, and often can't be deferred in times of hardship. Nationally, about 5 percent of students default on federal loans. [San Antonio Express-News, 6/24/07]

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