Steven BrooksExecutive DirectorState Education Assistance Authority

Paying for College in North Carolina: Perspectives on Student Loan Debt and College Affordability

What we constantly hear about college...

College costs too much, delivers too little [Orange County Register]

College Costs Out Of Control [Forbes]

America’s Trillion Dollar Student Loan Train Wreck [Sense on ¢ents]

Student Loan Debt: $1 Trillion and Counting [Forbes]

Student loan debt nearing $1 trillion threatens recovery [NY Daily News]

Real Questions:

– Are there really lots of students with debts of $75,000?

– Are students borrowing more or are more students borrowing? Or both?

– What are average debt levels and how are they changing?

– What is really happening regarding college costs and financial aid in North Carolina?

Student Loan Debt: National ContextNationally, of all students who entered college in 2003-04...

– 43% have no federal Stafford Loan debt– 25% have debt under $10,000– 16% have debt between $10,000 and $20,000 – 16% have debt over $20,000

8% > $20,000 - $29,9998% > $30,000

2% > $50,000 1% > $75,000

1% 1%

5%

8%

16%

25%

43%

> 75,000$50-75,000$30-50,000$20-30,000$10-20,000$1 - 10,000No debt

National Percentage of Undergraduate Students Borrowing Federal Stafford Loans

National Average Total Debt LevelsBachelor’s Degree Recipients

Public Four-Year Colleges and Universities in 2011 Dollars

National Average Total Debt LevelsBachelor’s Degree Recipients

Private Nonprofit Four-Year Colleges and Universitiesin 2011 Dollars

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

377,585,150

401,635,740

451,515,194

501,018,732

564,868,203

597,589,475

615,762,297

689,029,659

820,603,970

987,760,166

1,079,620,657

+ 186%

Student Borrowing: North Carolina

Total Dollars Borrowed for Stafford Loans

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201150000

100000

150000

200000

250000

300000

118,124

125,785 139,480

150,697159,982

176,651 178,961189,402

206,314

251,344

281,720

+139%

Student Borrowing: North Carolina

Total Number of Stafford Loan Borrowers

2006 2011 % Increase

North Carolina $17,760 $20,800 17%% Graduates With Debt 54%

United States $19,646 $26,600 35%% Graduates With Debt 66%

Percent NC Average Debt Under National Average 10% 22% 52%

Student Borrowing: North Carolina

Average Debt at Graduation for Bachelor’s Degree Recipients at

North Carolina Colleges and Universities

2001 2011 % Increase

University of North Carolina $2,134 $4,956 132%

Community College $909 $1,854 104%

Private 4-Year College or University $12,497 $23,341 87%

College Costs: North Carolina

Average Tuition and Fees at North Carolina Institutions

Estimated “Sticker Price” - Entering Fall Semester, 2012 Tuition, fees, room, meals, books, supplies, transportation and personal

expenses

How Much Will It Cost?

2012 2013 2014 2015 Total

Community College 14,500 15,225 29,725 UNC Campus 18,950 19,898 20,892 21,937 81,677 North Carolina Private 34,000 35,700 37,485 39,359 146,544 Out of State Public 34,000 35,700 37,485 39,359 146,544 Out of State Private 42,224 44,335 46,552 48,880 181,991

Cost estimates are unweighted averages, inflated at 5% per year

2001 2011 % Increase

Need Based State Grants $60 $329 448%Pell Grants $185 $953 415%

Subsidized Stafford Loans $213 $535 151%Unsubsidized Stafford Loans $165 $544 230%

Financial Assistance: North Carolina

Total Student Financial Aid Awarded(in millions, rounded)

14

College costs can be daunting … but

Government Gets BackIts Investment!

Consider the cost as an investment that pays rich dividends

16

College costs can be daunting … but

There are four ways to pay for this investment– Saving in advance– Paying from current income– Borrowing – pay with future income– Scholarships and Grants

Costs do not have to be paid all at once

17

Observations on the four ways to pay

It is less expensive to save than to borrow

– Those who do not save have to borrow more– Current income can cut borrowing costs as well– Some level of sacrifice – at some point – will have to be made

(sooner, now, or later)– Need-based grants and scholarships are designed to provide

the amount that the family and student cannot reasonably afford over time

Most families use a combination of all saving, borrowing and current income to pay their share of college expenses.

So, what should the headlines actually say?

• Student loans should be approached cautiously, but for the vast majority they provide access to higher education.

• College costs a lot, but it is worth it, and financial aid lowers the cost for those who need help.

• College Works! Research shows that college graduates have– Greater wealth– More financial security– Better health– Stronger community– Closer family

–For more information please see http://www.cfnc.org/static/pdf/paying/pubs/pdf/pdf/5WaysBro_Eng.pdf