The horror stories are out there. People have racked up as much as $100,000 or $200,000 in student loans while pursuing a degree. But they’re not the norm. In fact, their stories skew the average debt load across graduates, and the average is not nearly as scary.
According to some of the most recent data, the average student loan debt among 2012 graduates who took out loans was $29,400. Overall, 71% of graduating seniors that year had student loan debt, according to the same statistics from The Institute for College Access and Success. That average smooths out the difference between types of schools — 66% of students at public colleges had loans, for example, compared to 88% at for-profit colleges. Reporting the debt as an average across all types of institutions has the same effect. The average debt among student loan holders at public colleges alone drops to $25,550. The median that year was closer to $19,000.
Sure, even the lowest of those averages can seem scary. But probably not to well-off families.
Vassar College President Catharine Bond Hill said recently while speaking to a group of journalists that terrible stories about extreme debt loads don’t turn away higher income families or families with multiple generations of college-goers. They might, however, scare away the families who would most benefit from investing in a child’s education through borrowing.
Bond Hill referred to statistics that show higher education leads to 65% higher earnings for those with bachelor’s degrees. “Borrowing may be a very good strategy for many, many students,” she said.
Edwin Harris is the director of financial aid at Eastern Connecticut State University. He has spent his entire career working in admissions and financial aid at both public and private institutions. At Eastern Connecticut State, the average student who takes out loans and graduates with a BA has about $22,000 to repay. Harris advises students to think about what job they expect to get after graduation when thinking about loan amounts, but he generally sees student loan debt as responsible debt.
While Harris and his wife saved for college for their three children, the couple still had them take out student loans and get jobs on campus to contribute to their educations. That meant they had some skin in the game, Harris said.
“I firmly believe that some debt is one more indication of whether a student is serious about what they’re doing,” Harris said.
The job of colleges and universities, then, is to make sure families have the information they need to decide what level of debt is responsible and what schools can best meet their needs. High-achieving, low-income students searching for colleges with a cheap sticker price, for example, may not end up paying less than they would at elite institutions with hefty endowments that come with significant scholarship money.
Vassar, a highly selective college, has done a particularly good job of welcoming talented low-income students and setting aside the financial aid funds to make their degrees affordable.
Harris thinks the financial aid community is attempting to do a better job at promoting financial literacy. Still, he said there needs to be more and better information for families about student loans.
“I don’t think education debt, particularly reasonable education debt, is going to go away,” Harris said.
Never mind the congressional resolutions to the contrary.
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