With Kirk Heffelmire
As we discussed here, the decline in state support is shifting the burden of higher education to students and their families. A direct consequence of this trend is that students are taking on more debt. According to the Institute for College Access & Success’s Student Debt and the Class of 2014 report, the average amount of debt among graduates who borrowed is nearly $29,000.
From 2004 to 2014, the average amount of debt for bachelor degree graduate borrowers nationwide has grown by 56 percent, which is more than double the 25 percent of inflation over the same period. In Virginia, average debt grew even faster from 2004 to 2014, with an increase of 67 percent, more than two-and-a-half times faster than inflation.
Almost 70 percent of bachelor degree recipients had some student loan debt, which is a 20-percentage-point increase since 1992. The majority of debt is in federal student loans, but 17 percent is in private loans. In Virginia, students earning bachelor degrees graduated with an average debt of $26,432 in 2014, which ranks exactly in the middle of all states. Sixty percent of Virginia bachelor degree graduates in 2014 left with debt, the 23rd lowest amount among the 50 states.
There is encouraging news from the College Board, namely that the rate of tuition increase and student borrowing is slowing down compared to the rapid increases during the recession. Separate reports (Trends in College Pricing and Trends in Student Aid) indicate a return to pre-recession trends.
Published tuition rates for in-state students at public institutions increased over the past year by 2.9 percent before adjusting for inflation, but this is below the 3.4 percent average annual increase above inflation over the previous 10 years.
This moderation of tuition increase together with a strengthening of the economy are driving a slowdown in annual borrowing. The total amount of borrowing across all higher education students (not just undergraduates) declined from $113.1 billion in 2013-14 to $106.1 billion in 2014-15. This decline follows a pattern of decrease since the peak of borrowing in 2010-11 at $124 billion. As current students graduate, this decline in annual borrowing should moderate the amount of debt per graduate.
These numbers highlight the need to continue to pay careful attention to student loan default rates as a key outcome. And they underline why it is so important that George Mason continues to perform among the best in the country in that regard.