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The Hechinger Report
A 56 percent increase in student debt
By Delece Smith-Barrow
Few college students can pay for their education without using federal
loans, but as we’ve seen in recent years, paying back student loans can
be overwhelming and financially draining. There are a number of reasons
for the more-than-$1.6 million student debt crisis, but a new report
from The Institute for College Access and Success highlights one of the
most glaring: inflation.
The average debt for college graduates from nonprofit institutions grew
by about 56 percent between 2004 and 2019, but inflation between that
time period grew 36 percent, according to TICAS. And the challenges of
student borrowing are likely to become worse as students and families
have less money available to pay for school.
“There’s no one single driver of student debt levels,” said Debbie
Cochrane, the executive vice president for TICAS, a research and
advocacy group. Part of the reason the amount of debt students carry
has skyrocketed is college costs, which often depend on how much or how
little states allot for higher education in their budgets.
“States over time have pulled back their support on a per-student
basis,” said Cochrane. When policy makers want to trim a state’s
budget, higher education is an attractive option, she said.
“You can’t charge your elementary school students tuition, but you can
charge college students, if there’s not enough resources to go around,”
Cochrane said.
In some states, the growth of average student debt is alarming. Between
2004 and 2019, when the average debt should have inflated by 36 percent
to match the overall inflation rate, it grew 107 percent in New Jersey,
100 percent in Pennsylvania and 95 percent in Massachusetts. Not
surprisingly, the cost of going to college at many institutions in
those states rose sharply.
At Drexel University in Philadelphia, the average debt for graduates
tripled between 2004 and 2019. Students from the class of 2019 who
borrowed had an average debt of $72,900 – the highest reported by any
college in the nation.
For some borrowers, local governments may help relieve their debt.
For example, in January, Colorado legislatures introduced a bill for a
Get on Your Feet Student Loan Repayment Assistance Program that would
cover up to 24 monthly payments for qualified borrowers. New York
introduced a similar program in 2015.
“We’ve started to see states become more and more active in trying to
tackle the student debt crisis,” said Seth Frotman, executive director
of the Student Borrower Protection Center.
And since 2015, at least 15 states have adopted a bill of rights for
student borrowers, which increases their authority to oversee how
student loan servicers are working with borrowers, according to a
report released this week from the Student Borrower Protection Center.
California Governor Gavin Newsom approved legislation for a student
loan borrowers’ bill of rights in September.
Even with recent state-sponsored programs to help student borrowers,
limiting and paying down debt will be challenging during the pandemic.
The U.S. unemployment rate is 7.9 percent, but it was 3.5 percent at
this time last year. Many students and families are unemployed or
underemployed, making college costs harder to bear.
“The same populations that we know are being devastated by Covid and
the subsequent economic fallout are the same ones that have been hit
the hardest by the student debt crisis,” Frotman said. Black and Latino
borrowers are being hit especially hard, he said.
In recent years debt levels had begun to flatten, “but the onset of Covid-19 puts those gains in jeopardy,” said Cochrane.
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