Within minutes of asking the first question of the presidential debate this week, the Adelphi University student Jeremy Epstein was trending on Twitter. His concern about being able to support himself after graduation—which prompted the candidates to discuss college affordability, student-loan debt, and unemployment—clearly resonated with many young Americans and their families.
There’s little doubt that recent graduates’ hard road has become a major national issue, one often dominated by headlines about individual student-loan debt in the six figures. In fact, student-loan debt has been going up, but modestly. According to new report from the Project on Student Debt, part of the Institute for College Access and Success, approximately two-thirds of seniors who graduated in 2011 borrowed to pay for college: Their average debt was $26,600 at graduation. That’s a 5-percent increase over the previous year, a trend that has been holding steady.
The report analyzes the debt of students at four-year public and private nonprofit colleges, finding rising levels and considerable variation among states and institutions.
The Project on Student Debt got started in 2005, before students commonly displayed their debt on signs. The goal then was “to call attention to rising student debt and the need for improved policy to help limit the burden of debt,” said Lauren J. Asher, president of the institute, which is known as Ticas.
“We’ve seen awareness growing,” Ms. Asher said. “It makes sense that more people are thinking about debt.”
But commonly reported stories of soaring debt may skew the picture. “This idea of the student loan bubble, students who graduate with six-figure debt, is a bit overblown in the media,” said Mark Kantrowitz, publisher of Fastweb and FinAid.org.
In fact, less than 1 percent of student borrowers have loan debt above $100,000. The $26,600 average reported by the Project on Student Debt is lower than the average starting salary of a bachelor’s-degree holder—$43,521 for those graduating in 2011, according to the National Association of Colleges and Employers—and therefore meets a common borrowing guideline for manageable repayment.
Of course, concerns over students’ debt burdens still loom large.
Young Invincibles, a youth advocacy group, is worried that two in three students graduate with debt, said Jen M. Mishory, the group’s deputy director. “Twenty-six thousand dollars is a lot of money,” she said. “It is a huge hole to have to crawl out of when you graduate.”
Students must be made more aware of the cost of college and availability of financial aid at various institutions, Ms. Mishory said. And to make informed decisions, both students and their families need better information about borrowing and repaying loans, she said.
Searching for Solutions
The Project on Student Debt offers some similar recommendations in its report. The federal government should “provide key information that students and families need to make wise decisions, including the average debt at graduation at all colleges that receive federal funding,” it says, echoing an element of the new Financial Aid Shopping Sheet that federal agencies are encouraging institutions to use. The report also suggests that federal officials “curb unnecessary risky borrowing by requiring school certification of all private loans” and “reduce the need to borrow by increasing need-based grant and tax aid.”
To promote real solutions for most students, it is important to bear in mind the circumstances they are often in, said Justin Draeger, president of the National Association of Student Financial Aid Administrators. “Focusing on outliers, it makes it increasingly difficult to have a realistic policy discussion,” he said.
Janet M. Riggs, president of Gettysburg College, is trying to temper some of the panic with frank discussion. “I do worry that some of these more sensational cases set a tone and may scare people away from pursuing a college degree,” she said. “Those of us in higher education need to be out there talking a little bit more clearly about options available for students.”
That means, in part, taking up the question of whether a bachelor’s degree is worth the cost. “College education is an excellent financial investment,” said Ms. Riggs. “Yes, it is an investment that needs to be entered into with great care, but the data are clear that college graduates are more likely to be employed, and over their lifetime make more money.”
But how quickly recent graduates are able to find good jobs in a tight economy is a common concern—one raised by Jeremy Epstein at the presidential debate. Mitt Romney, the Republican candidate, responded that 50 percent of students coming out of college were not finding jobs.
According to the Project on Student Debt’s report, 8.8 percent of recent graduates are unemployed. Anthony P. Carnevale, director of Georgetown University’s Center on Education and the Workforce, says that about 14 percent of recent graduates are either unemployed or underemployed.
Mr. Carnevale, who has studied discrepancies in salary by major, would have asked Mr. Epstein, as any college student, what he was studying. “There’s no reason for the kid not to know what his prospects are,” Mr. Carnevale said.
Reports and advocacy groups may call for more information on college costs and financial aid, including guidance on borrowing; Mr. Carnevale argues for transparency on job availability and likelihood of employment by major. What students need, he said, is career counseling.
