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Student Debt Student Debt Susan Choy Susan Choy MPR Associates MPR Associates Berkeley, California Berkeley, California [email protected] [email protected] SHEEO Professional Development SHEEO Professional Development Conference Conference Seattle, August 2005 Seattle, August 2005

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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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Page 1: Student Debt

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

Page 2: Student Debt

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

Page 3: Student Debt

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

Page 4: Student Debt

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

Page 5: Student Debt

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

Page 6: Student Debt

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

Page 7: Student Debt

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

Page 8: Student Debt

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

Page 9: Student Debt

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

Page 10: Student Debt

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

Page 11: Student Debt

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

Page 12: Student Debt

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

Page 13: Student Debt

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

Page 14: Student Debt

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

Page 15: Student Debt

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

Page 16: Student Debt

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

Page 17: Student Debt

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

Page 18: Student Debt

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

Page 19: Student Debt

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

Page 20: Student Debt

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