Student Debt Student Debt Susan Choy Susan Choy MPR Associates MPR Associates Berkeley, California Berkeley, California [email protected][email protected]SHEEO Professional Development SHEEO Professional Development Conference Conference Seattle, August 2005 Seattle, August 2005
Student Debt. SHEEO Professional Development Conference Seattle, August 2005. Susan Choy MPR Associates Berkeley, California [email protected]. Why Student Debt Has Increased. Growth in tuition and fees has outpaced growth in median family income - PowerPoint PPT Presentation
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SHEEO Professional Development SHEEO Professional Development ConferenceConference
Seattle, August 2005Seattle, August 2005
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Why Student Debt Has IncreasedWhy Student Debt Has Increased
Growth in tuition and fees has outpaced growth in Growth in tuition and fees has outpaced growth in median family incomemedian family income– From 1993–94 to 2003–04, after adjusting for inflationFrom 1993–94 to 2003–04, after adjusting for inflation
• Tuition at public 4-year institutions increased by 44%Tuition at public 4-year institutions increased by 44%• Tuition at private institutions increased by 35%Tuition at private institutions increased by 35%• Median family income (ages 45-54) increased by 6%Median family income (ages 45-54) increased by 6%
1992 reauthorization of the Higher Education Act1992 reauthorization of the Higher Education Act– Expanded eligibility for student aidExpanded eligibility for student aid– Raised loan limitsRaised loan limits– Introduced unsubsidized loans for all students, Introduced unsubsidized loans for all students,
regardless of needregardless of need
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Growth in Student Loan VolumeGrowth in Student Loan Volume (Constant 2003 Dollars)(Constant 2003 Dollars)
Source: The College Board, Trends in Student Aid, 2004
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Percent with Student LoansPercent with Student LoansUndergraduatesUndergraduates
Public 2-yearPublic 2-year Proprietary, <4-yearProprietary, <4-year
LoansLoans
*Represents statistically significant change from 1989-90.*Represents statistically significant change from 1989-90.
FamilyFamily
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Percentage of Bachelor’s Degree Percentage of Bachelor’s Degree Recipients Who BorrowedRecipients Who Borrowed
100100
8080
6060
4040
2020
00
6565
4949
PercentPercent
1992-931992-93 1999-20001999-2000
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Average Amount Borrowed Average Amount Borrowed Bachelor’s Degree Recipient BorrowersBachelor’s Degree Recipient Borrowers
(Constant 1999 Dollars) (Constant 1999 Dollars)
$25,00$25,0000
20,0020,0000
15,0015,0000
10,0010,0000
5,0005,000
001992-931992-93 1999-20001999-2000
19,30019,300
12,10012,100
Amount Amount borrowedborrowed
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Average Monthly PaymentAverage Monthly Payment (Constant 2001 Dollars)(Constant 2001 Dollars)
$250$250
200200
150150
100100
5050
0019941994 20012001
210210
160160
Monthly Monthly paymentpayment
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Average Annual SalaryAverage Annual Salary (Constant 2001 Dollars)(Constant 2001 Dollars)
28,30028,300
$40,00$40,0000
30,0030,0000
20,0020,0000
10,00010,000
00
34,10034,100
Annual Annual salarysalary
19941994 20012001
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Percentage Distribution of Loan Percentage Distribution of Loan Repayers by Debt BurdenRepayers by Debt Burden
3131
5050
4040
3030
2020
1010
00
PercentPercent
<5<5%%
3333
1616
991212
5-5-8%8%
9-9-12%12%
13-13-16%16%
17%17%++
Median: Median: 6.76.7
2828
<5<5%%
3636
2020
7799
5-5-8%8%
9-9-12%12%
13-13-16%16%
17%17%++
Median: Median: 6.96.9
19941994 20012001
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SummarySummary
Student borrowing continues to increase, Student borrowing continues to increase, especially unsubsidized Stafford loans and especially unsubsidized Stafford loans and alternative loansalternative loans
Largest increases in percent borrowing have Largest increases in percent borrowing have been at the high income levels, while the been at the high income levels, while the largest increases in average amount borrowed largest increases in average amount borrowed have been at the middle-income levelshave been at the middle-income levels
Grant aid has increased, but loans once again Grant aid has increased, but loans once again account for a greater percentage of total aidaccount for a greater percentage of total aid
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Summary (continued)Summary (continued)
Price increases have been absorbed by Price increases have been absorbed by increased grants and loans rather than increased grants and loans rather than current family outlayscurrent family outlays
For bachelor’s degree recipients, For bachelor’s degree recipients, borrowing has increased, but salaries borrowing has increased, but salaries have increased and interest rates have have increased and interest rates have declined, leaving debt burden relatively declined, leaving debt burden relatively unchanged unchanged
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For More InformationFor More Information
L. Berkner et al., L. Berkner et al., 2003-04 National Postsecondary Student Aid Study 2003-04 National Postsecondary Student Aid Study (NPSAS:2004): Student Financial Aid Estimates for 2004 (NPSAS:2004): Student Financial Aid Estimates for 2004 (NCES 2005-158)(NCES 2005-158)
L. Berkner et al., L. Berkner et al., 2003-04 National Postsecondary Aid Study (NPSAS:2004): 2003-04 National Postsecondary Aid Study (NPSAS:2004): Undergraduate Financial Aid Estimates for 2003-04 by Type of Institution Undergraduate Financial Aid Estimates for 2003-04 by Type of Institution (NCES (NCES 2005-163)2005-163)
Choy, S. and Li, X., Choy, S. and Li, X., Debt Burden: A Comparison of 1992-93 and 1999-2000 Debt Burden: A Comparison of 1992-93 and 1999-2000 Bachelor’s Degree Recipients a Year After GraduatingBachelor’s Degree Recipients a Year After Graduating (NCES 2005-170) (NCES 2005-170)
Choy, S. Choy, S. Paying for CollegePaying for College (NCES 2004-075) (NCES 2004-075)http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2004075http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2004075
The College Board, The College Board, Trends in Student Aid,Trends in Student Aid, 20042004