May 22, 2012 11:30 AM EDT
Soaring Costs of College Straps Students With Unprecedented Financial Burden
With more than $1 trillion in student loans outstanding in this country, debt is no longer confined to dropouts from for-profit colleges or graduate students, some of the overextended debtors in years past. As prices soar, a college degree statistically remains a good lifetime investment, but it often comes with an unprecedented financial burden.
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About two-thirds of bachelor's degree recipients borrow money to attend college, either from the government or private lenders, according to a Department of Education survey of 2007-8 graduates; the total number of borrowers is most likely higher since the survey does not track borrowing from family members.
By contrast, 45 percent of 1992-93 graduates borrowed money; that survey included family borrowing as well as government and private loans.
For all borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000, the Federal Reserve Bank of New York reports. The average debt for bachelor degree graduates who took out loans ranges from under $10,000 at elite schools like Princeton and Williams College, which have plenty of wealthy students and enormous endowments, to nearly $50,000 at some private colleges with less affluent students and less financial aid.
The current balance of federal student loans nationwide is $902 billion, with an additional $140 billion or so in private student loans, according to The Project on Student Debt, a nonprofit, education advocacy organization.
The roots of the borrowing binge date to the 1980s, when tuition for four-year colleges began to rise faster than family incomes. In the 1990s, for-profit colleges boomed by spending heavily on marketing and recruiting. Despite some ethical lapses and fraud, enrollment more than doubled in the last decade and Wall Street swooned over the stocks. Roughly 11 percent of college students now attend for-profit colleges, and they receive about a quarter of federal student loans and grants.
Nationally, state and local spending per college student, adjusted for inflation, reached a 25-year low this year, jeopardizing the long-held conviction that state-subsidized higher education is an affordable steppingstone for the lower and middle classes. All the while, the cost of tuition and fees has continued to increase faster than the rate of inflation. If the trends continue through 2016, the average cost of a public college will have more than doubled in just 15 years, according to the Department of Education.
Source: The New York Times