Two of every three college seniors graduated with loan debt in 2010, with the typical borrower owing $25,250 and students at some historically Black institutions facing higher repayments, new research shows.
The sixth annual report on graduates’ borrowing from The Project on Student Debt showed that average debt continued to rise for those who completed studies at a four-year public or private non-profit institution. With the students and their families facing a challenging economy, average debt among graduates increased by 5 percent from 2009.
Budget reductions at the state level also likely contributed to the additional borrowing. “State budget cuts led to sharp tuition increases at some public colleges, also increasing the need to borrow,” the organization said in its report, Student Debt and the Class of 2010.
In addition, at least 22 percent of the debt accrued by college graduates came from private loans, which carry higher interest rates than government loans. About 33 percent of bachelor’s degree recipients graduated with private loans, with an average debt of $12,550.
“Most students in the Class of 2010 started college before the recent economic downturn, but the economy soured while they were still in school, widening the gap between rising college costs and what students and their parents could afford,” according to the report.
At the same time, these 2010 graduates faced a job market in which young college graduates had a 9.1 percent unemployment rate — the highest rate on record.
Report data showed that Pell Grant recipients were particularly likely to borrow for college, as 86 percent of these students graduated with loan debt. Among more affluent students who did not qualify for Pell Grants, only 51 percent had any debt when they graduated.
Three historically Black colleges and universities were among public institutions where graduates incurred the most debt, the report noted, although all had high rates of Pell Grant recipients.
Students at Alabama A&M University graduated with one of the highest debt levels among public colleges at $31,863, the report stated. At that school, 78 percent graduated with debt, although 62 percent of students were Pell Grant recipients because of their low incomes.
The debt project also cited Delaware State University and Alabama State University among public institutions with high debt amounts, with students facing average repayments of $36,410 and $29,795, respectively. Yet 70 percent of Alabama State’s graduates had received Pell Grants, as did 54 percent of Delaware State’s graduates.
Other public institutions with high rates of student debt included Temple University and multiple campuses of Penn State University.
The report also calculated state averages for student debt. Students in the Northeast and Midwest were the highest borrowers, likely because of the larger share of private non-profit colleges in those regions. New Hampshire had the highest average debt among graduates with $31,048, while Utah had the lowest at $15,509.
Information for private, for-profit colleges was not available as few of these institutions report comprehensive debt data, project staff noted. However, they urged the federal government to step up data collection across more schools. The U.S. Education Department also should collect more data on private loan borrowing, because it only collects such information for first-year, full-time students, the report states.
Elsewhere, the report noted, colleges should do more to ensure that students have tapped all federal loan eligibility before a student can take out a private loan.
Student Debt and the Class of 2010 is available at www.projectonstudentdebt.org. The project is part of The Institute for College Access and Success.