Thursday, August 13, 2009

College Board Brief Highlights Patterns in Student Debt

NEW YORK —Although student debt increased rapidly for students in some sectors of higher education during the last four years, the amount of debt accumulated by graduates of public and private four-year colleges grew relatively slowly from 2003-04 to 2007-08. Still, a growing minority graduate with excessive debt. This information and other insights are the focus of a policy brief released today by the College Board based on new data from the U.S. Department of Education’s National Postsecondary Student Aid Study (NPSAS).

“How Much Are College Students Borrowing?” analyzes information in NPSAS, which reveals that among all students who completed a degree — associate, bachelor’s or a certificate — in the 2007-08 academic year, 41 percent graduated with no debt. Among all students, those completing any undergraduate degree with education debt increased from 54 percent in 2003-04 to 59 percent in 2007-08. The most rapid increases were within the for-profit sector and for all students earning certificates and two-year degrees.

College Board President Gaston Caperton said, “The analyses in ‘How Much Are College Students Borrowing?’ examine the borrowing decisions students and families are making. We are committed to working with our member colleges and universities and policymakers to create a financial aid system that will help a new generation of students, especially low- and middle-income students, pay for college without unmanageable debt.”

The median debt level of 2007-08 bachelor’s degree recipients at public four-year colleges was $17,700, a 4 percent ($710) increase in inflation-adjusted dollars over five years. The median debt level of 2007-08 bachelor’s degree recipients at private four-year institutions was $22,375, which is a 5 percent ($1,137) increase in inflation-adjusted dollars over five years.

“Many students borrow at some point in their college careers, but not every year,” said Sandy Baum, coauthor of the policy brief and senior policy analyst at the College Board. “Borrowing moderately is a responsible way to pay for college, but students should consider how much they can expect to earn when they graduate and whether they will be able to afford the required monthly payments.”

In 2007-08, 39 percent of all students and 54 percent of all full-time students took out an education loan.

Bachelor's degree recipients were more likely than other graduates to have relied on education loans. In 2007-08, 66 percent of bachelor’s degree recipients graduated with debt, including 62 percent who had federal loans and 33 percent who had borrowed from nonfederal sources. A much larger fraction of graduates of for-profit institutions relied on private loans.

Increases in Debt Largest Among Students in For-Profit Sector

Much of the growth in borrowing evident in 2007-08 occurred in the private nonfederal loan market. These loans are less desirable than federal loans, which have interest rates limited by law and provisions for economic hardship. Federal loans also are eligible for the new Income-Based Repayment plan. The IBR plan ensures that federal education debt payments never exceed 15 percent of the borrower’s discretionary income and that any remaining debt is forgiven after 25 years.

Patricia Steele, coauthor of the policy brief and an analyst at the College Board, said, “There is reason to be concerned about those who borrow far more than the average amount. Students who complete a degree with excessive debt face burdensome repayment obligations.”

About 10 percent of all bachelor’s degree recipients in 2007-08 borrowed $40,000 or more and the proportions were much higher at private and for-profit institutions.

Among students earning associate degrees, the share of students borrowing increased 8 percentage points in both the public two-year and for-profit sectors between 2003-04 and 2007-08. For students who completed a certificate, the percent who borrow increased from 18 to 30 percent in the public two-year sector, and from 85 to 90 percent in the for-profit sector.

In addition to reporting the average debt of undergraduate borrowers, the policy brief focuses on the distribution of debt levels among all — borrowing and nonborrowing — college graduates. It also examines annual borrowing patterns among college students.

“How Much Are College Students Borrowing?” is available online at

The College Board

The College Board is a not-for-profit membership association whose mission is to connect students to college success and opportunity. Founded in 1900, the College Board is composed of more than 5,600 schools, colleges, universities and other educational organizations. Each year, the College Board serves seven million students and their parents, 23,000 high schools, and 3,800 colleges through major programs and services in college readiness, college admissions, guidance, assessment, financial aid, enrollment, and teaching and learning. Among its best-known programs are the SAT®, the PSAT/NMSQT® and the Advanced Placement Program® (AP®). The College Board is committed to the principles of excellence and equity, and that commitment is embodied in all of its programs, services, activities and concerns. For further information, visit


Nancy Viggiano, The College Board, (212) 713-8052, 

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