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Student loan debt for bachelor’s degree recipients continues to grow

Student loan borrowers still aren’t catching a break.

The average student loan debt for a bachelor’s degree recipient in 2015 was $30,100, a 4% uptick from a year earlier, according to a report released Tuesday by The Institute for College Access and Success, a nonprofit focused on increasing access to higher education.

The report only looks at graduates from nonprofit private and public colleges, and therefore likely underestimates the level of debt because it doesn’t include borrowers from attended for-profit colleges, who tend to have higher debt loads. The findings indicate that despite policy makers’ increased attention to college costs and student debt over the past few years, the issue doesn’t seem to be abating, even for those borrowers arguably set up to succeed because they made it through college. Nearly 70% of the 2015 graduates from nonprofit private and public colleges had student debt, the report notes.

State disinvestment in higher education over the last several years largely explains why college costs continue to rise and student debt continues to grow, said Debbie Cochrane, the vice president of TICAS. “States need to increase their per-student level of support for public colleges, she said. “States are unlikely to do that or do that sufficiently on their own.”
Policy makers have been increasingly looking at ways the federal government can encourage states to support their public colleges. Both President Barack Obama and Democratic presidential candidate Hillary Clinton have proposed plans that would use federal government incentives to help states make some time in public college free for residents.

But in the mean time, students and families are still coping with rising costs and the report points to other troubling factors that indicate students and families may not have enough or the right information to ensure they’re taking on manageable debts.

Nearly one-fifth of the debt held by 2015 graduates came from a source other than the federal student loan program. These loans typically have higher interest rates and don’t come with the same protections offered by the federal government, which is why experts suggest borrowers exhaust their federal loan eligibility before turning to other sources. But nearly half of undergraduates with private debt during the 2011 to 2012 school year didn’t use the maximum amount of federal loans for which they were eligible, the report noted.

While many assume that all nonfederal debt comes from private banks and lenders, state governments are also in the business of originating student loans. The terms of these loans often look more similar to those that come from private lenders than those offered by the federal government, and they’re particularly concentrated in certain areas of the country. Two-thirds of the graduates of the class of 2015 with state-sponsored student loan debt went to college in just three states: Texas, New Jersey and Minnesota.

“States have taken different approaches to the issues of college affordability and college financing,” said Cochrane. “Where some states have chosen to increase grant aid, others at some point believed that creating a state loan program will better position the students to pay for college.”

This can be problematic because in some cases, state-sponsored student loans can have onerous terms. For example, the state authority in New Jersey that runs the student loan program holds family members liable for a student debt even once the borrower dies, ProPublica and the New York Times reported earlier this year.

“The terms of private loans vary widely,” Cochrane said. “That’s true across the bank held loans, state loans or school loans. It really gets to the importance of consumer disclosures.”

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