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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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Student DebtStudent Debt
Susan ChoySusan ChoyMPR AssociatesMPR Associates
Berkeley, CaliforniaBerkeley, California
[email protected]@mprinc.com
SHEEO Professional Development SHEEO Professional Development ConferenceConference
Seattle, August 2005Seattle, August 2005
2
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
3
Growth in Student Loan VolumeGrowth in Student Loan Volume (Constant 2003 Dollars)(Constant 2003 Dollars)
Source: The College Board, Trends in Student Aid, 2004
4
Percent with Student LoansPercent with Student LoansUndergraduatesUndergraduates
2929
100100
8080
6060
4040
2020
00TotalTotal Public 2-Public 2-
yearyearPublic 4-yearPublic 4-year Private 4-yearPrivate 4-year
3535
121277
40404545
PercentPercent
50505656
1999-1999-20002000
2003-042003-04
5
Average Amount in Student LoansAverage Amount in Student LoansUndergraduate BorrowersUndergraduate Borrowers
1999-1999-20002000
2003-042003-04
5,1005,100
$10,00$10,0000
8,0008,000
6,0006,000
4,0004,000
2,0002,000
00
5,8005,800
3,6003,6003,3003,300
4,8004,8005,6005,600
Average Average amountamount
6,2006,2006,9006,900
TotalTotal Public 2-Public 2-yearyear
Public 4-yearPublic 4-year Private 4-yearPrivate 4-year
6
Percent with Student Loans, by Percent with Student Loans, by IncomeIncome
Full-Time, Full-Year UndergraduatesFull-Time, Full-Year Undergraduates
50%50%
46%46%
53%53%
49%49%
48%48%
48%48%
38%38%
57%57%
45%45%
45%45%
51%51%
49%49%
47%47%
42%42%
29%29%
49%49%
TotalTotal
Dependent studentsDependent students
Less than $20,000Less than $20,000
$20,000-39,999$20,000-39,999
$40,000-59,999$40,000-59,999
$60,000-79,999$60,000-79,999
$80,000-99,999$80,000-99,999
$100,000 or more$100,000 or more
Independent Independent studentsstudents
2003-042003-041999-20001999-2000
7
Average Amount in Student Loans, by Average Amount in Student Loans, by IncomeIncome
Full-Time, Full-Year Undergraduate BorrowersFull-Time, Full-Year Undergraduate Borrowers
2003-042003-04
$6,20$6,2000
5,2005,200
5,4005,400
5,7005,700
5,7005,700
5,8005,800
5,8005,800
7,5007,500
1999-20001999-2000
$5,40$5,4000
4,7004,700
4,9004,900
4,7004,700
4,9004,900
5,1005,100
5,2005,200
6,8006,800
TotalTotal
Dependent studentsDependent students
Less than $20,000Less than $20,000
$20,000-39,999$20,000-39,999
$40,000-59,999$40,000-59,999
$60,000-79,999$60,000-79,999
$80,000-99,999$80,000-99,999
$100,000 or more$100,000 or more
Independent Independent studentsstudents
% Change% Change
1515
1111
1010
2121
1616
1414
1212
1010
8
Percent with Student LoansPercent with Student LoansGraduate and Professional StudentsGraduate and Professional Students
2727
100100
8080
6060
4040
2020
00Master’sMaster’s DoctoralDoctoral ProfessionalProfessional
4141
3131
2222
PercentPercent
7676 7878
1999-1999-20002000
2003-042003-04
9
1999-1999-20002000
2003-042003-04
12,40012,400
$30,00$30,0000
20,00020,000
10,0010,0000
00
13,60013,600
17,80017,800
13,20013,200
Average Average amountamount
20,00020,000
26,40026,400
Master’sMaster’s DoctoralDoctoral ProfessionalProfessional
Average Amount with Student Average Amount with Student LoansLoans
Graduate and Professional Student BorrowersGraduate and Professional Student Borrowers
25,00025,000
15,00015,000
5,0005,000
10
Grants vs. Loans Grants vs. Loans Percent Share of Total Aid, 1993-94 to 2003-04Percent Share of Total Aid, 1993-94 to 2003-04
Source: The College Board, Trends in Student Aid, 2004
11
Paying for College: 4-year Paying for College: 4-year InstitutionsInstitutions
(Constant 1999 Dollars)(Constant 1999 Dollars)Full-time Dependent UndergraduatesFull-time Dependent UndergraduatesFamilyFamily GrantsGrants
10,00010,000
$25,00$25,0000
15,00015,000
10,0010,0000
00
12,400*12,400*
1989-1989-9090
20,00020,000
5,0005,0008,0008,000
9009001,2001,200
2,500*2,500*
1,900*1,900*
1999-20001999-2000
13,400 12,800
4,0004,000
2,0002,000
4,800*4,800*
6,800*6,800*
19,40019,400
24,400*24,400*
1989-1989-9090
1999-20001999-2000
Public 4-yearPublic 4-year Private not-for-profit 4-Private not-for-profit 4-yearyear
LoansLoans
*Represents statistically significant change from 1989-90.*Represents statistically significant change from 1989-90.
Average Average amountamount
12
Paying for College: <4-year Paying for College: <4-year InstitutionsInstitutions
(Constant 1999 Dollars)(Constant 1999 Dollars)Full-time Dependent UndergraduatesFull-time Dependent UndergraduatesGrantsGrants
7,3007,300
$25,00$25,0000
15,00015,000
10,0010,0000
00
8,500*8,500*
Average Average amountamount
1989-1989-9090
20,00020,000
5,0005,0007,000*6,500
600600200200 500*500*
1,100*1,100*
1999-20001999-2000
10,000 8,800*
1,7001,700
3,1003,100 5,400*5,400*
1,8001,800
14,70014,70016,00016,000
1989-1989-9090
1999-20001999-2000
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
13
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
14
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
15
Average Monthly PaymentAverage Monthly Payment (Constant 2001 Dollars)(Constant 2001 Dollars)
$250$250
200200
150150
100100
5050
0019941994 20012001
210210
160160
Monthly Monthly paymentpayment
16
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
17
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
18
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
19
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
20
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)
http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005158http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005158
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)
http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005163http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005163
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)
http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005170http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005170
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