CEPR
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FOR IMMEDIATE RELEASE
SEPTEMBER 8, 2005
12:14 PM
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CONTACT: Center for Economic and Policy Research
Lynn Erskine 202-293-5380 x115
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Student Debt Rising Due to Higher College Costs
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WASHINGTON - September 8 - The average indebted graduating senior was $17,600
in debt on graduation day last year, according to a study by the Center
for Economic and Policy Research. Nearly two-thirds of students attending
a four-year public college or university take on student loans, and loans
now comprise over half of financial aid packages, up from about one-fifth
in the 1970s.
The report, "Student Debt: Bigger and Bigger," found that
expenses at public four-year universities have risen 59.4 percent since
1990, with private university expenses increasing 51.1 percent (adjusted
for inflation). High levels of student debt are the result of rapidly
increasing college costs and policy choices that have made more loans --
and not grant aid -- available to students.
"American students are graduating with more debt than ever. We are
handing college graduates a bill for more than $17,000 when they receive
their diploma," said Heather Boushey, CEPR economist and author of
the study. "Working your way through college is no longer possible
with such a low minimum wage and few grants available to students."
Analyzing data from the College Board and the National Center for
Education Statistics' "National Postsecondary Student Aid
Survey," CEPR found that students are taking on more loans to cover
rising college costs. Another recent development has been the increase in
nonfederal loans, of which the majority are private sector loans (94
percent in 2004) and the remainder are state government loans.
In 2003-04, graduates of public four-year institutions owed an average of
$15,662 and graduates of private four-year institutions owed an average
of $22,581. The report also found that students from lower-income
families who attend public schools are one-third more likely to take on
debt than students from high-income families.
In 1981, college students could work full-time all summer at a minimum
wage job and earn about two-thirds of their annual college costs, leaving
less than $2,000 (in inflation-adjusted 2004 dollars) that they needed to
pull together from grants, loans, working during the school year, or
their parents. Today, however, students earning minimum wage would have
to work full-time for one year in order to afford one year of education
at a four-year public college or university.
Higher levels of student debt have implications for how students think
about career and life-choices. Highly indebted college graduates may
choose to postpone marriage, buy a house, or start a family in order to
pay off their loans.
Full Report
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