Students who earned their bachelor's degrees in 2010 and borrowed to help pay for their education graduated with an estimated average of $25,250 in student loans, says a report released Thursday by the Project on Student Debt. About two-thirds of graduates had borrowed, the report says.
The report, "Student Debt and the Class of 2010," considers the debt levels only of students who earned their degrees from public and private nonprofit four-year institutions, because the group does not have access to enough data on the debt of graduates from for-profits.
The $25,250 estimate is based on data colleges voluntarily report to Peterson's, the guidebook publisher. The debt levels reported to Peterson's are consistently lower than those reported in the more-comprehensive National Postsecondary Student Aid Study, or NPSAS, which is widely considered the best source of national financial-aid data, but comes out only every four years.
To account for that discrepancy, the Project on Student Debt takes the most recent NPSAS figure, from 2008, and increases it by the percentage the Peterson's figure has grown in the time since NPSAS was released. So this year, the group took the $22,750 NPSAS reported for the average debt of 2008 graduates who had borrowed and increased it by 11 percent, the percent difference between the 2008 and 2010 averages from Peterson's.
The share of graduates reported to have debt is also lower in the Peterson's data, and has not increased since 2008, so the report uses the figure from the last NPSAS, 65 percent.
With all the public attention student debt has gotten lately, and the rising average amount of debt at graduation, the government's income-based repayment option for federal loans "has never been more important," said Lauren J. Asher, president of the Institute for College Access & Success, which runs the Project on Student Debt. Still, she said, many borrowers are not aware of the program, something she hopes might change after the recent announcement of President Obama's student-loan plan, which provides some debt relief for certain groups of borrowers.
Most students who graduated in 2010 entered college before the economic downturn. The recession widened "the gap between rising college costs and what students and their parents could afford," the report says. State support of higher education dropped while those students were in college, leading to tuition increases at many public colleges. At the same time, students may have been shielded from even higher levels of debt by the increase in government and institutional grant aid.
Recent college graduates face a difficult climate in which to repay their loans, the report notes. The unemployment rate for young college graduates rose from 8.7 percent in 2009 to 9.1 percent in 2010, according to unpublished data from the Bureau of Labor Statistics, it says. Still, the outlook is much better for young college graduates than for those age 20 to 24 with only a high-school degree: The unemployment rate for that group was 20.4 percent in 2010.
The report also lists states—and individual colleges—where students graduate with unusually high or low levels of debt, but it cautions that the college-level data are not reliable enough to use in ranking institutions.