1. Student Debt Susan Choy MPR Associates Berkeley, California schoy@mprinc.com SHEEO Professional Development Conference Seattle, August 2005

2. 2 Why Student Debt Has Increased  Growth in tuition and fees has outpaced growth in median family income –From 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 Act –Expanded eligibility for student aid –Raised loan limits –Introduced unsubsidized loans for all students, regardless of need

3. 3 Growth in Student Loan Volume (Constant 2003 Dollars) Source: The College Board, Trends in Student Aid, 2004

4. 4 Percent with Student Loans Undergraduates 29 100 80 60 40 20 0 Total Public 2-year Public 4-year Private 4-year 35 12 7 40 45 Percent 50 56 1999-20002003-04

5. 5 Average Amount in Student Loans Undergraduate Borrowers 1999-20002003-04 5,100 $10,000 8,000 6,000 4,000 2,000 0 5,800 3,600 3,300 4,800 5,600 Average amount 6,200 6,900 Total Public 2-year Public 4-year Private 4-year

6. 6 Percent with Student Loans, by Income Full-Time, Full-Year Undergraduates 50%46%53%49%48%48%38%57%45%45%51%49%47%42%29%49%Total Dependent students Less than $20,000 $20,000-39,999$40,000-59,999$60,000-79,999$80,000-99,999 $100,000 or more Independent students 2003-041999-2000

7. 7 Average Amount in Student Loans, by Income Full-Time, Full-Year Undergraduate Borrowers 2003-04 $6,2005,2005,4005,7005,7005,8005,8007,500 1999-2000 $5,4004,7004,9004,7004,9005,1005,2006,800Total Dependent students Less than $20,000 $20,000-39,999$40,000-59,999$60,000-79,999$80,000-99,999 $100,000 or more Independent students % Change 1511102116141210

8. 8 Percent with Student Loans Graduate and Professional Students 27 100 80 60 40 20 0 Master’sDoctoralProfessional 41 31 22 Percent 76 781999-20002003-04

9. 91999-20002003-0412,400 $30,000 20,000 10,000 0 13,600 17,800 13,200 Average amount 20,000 26,400 Master’sDoctoralProfessional Average Amount with Student Loans Graduate and Professional Student Borrowers 25,000 15,000 5,000

10. 10 Grants vs. Loans Percent Share of Total Aid, 1993-94 to 2003-04 Source: The College Board, Trends in Student Aid, 2004

11. 11 Paying for College: 4-year Institutions (Constant 1999 Dollars) Full-time Dependent Undergraduates FamilyGrants 10,000 $25,000 15,000 10,000 0 12,400* 1989-90 20,000 5,000 8,000 900 1,200 2,500* 1,900* 1999-2000 13,400 12,800 4,000 2,000 4,800* 6,800* 19,400 24,400* 1989-901999-2000 Public 4-year Private not-for-profit 4-year Loans *Represents statistically significant change from 1989-90. Average amount

12. 12 Paying for College: <4-year Institutions (Constant 1999 Dollars) Full-time Dependent Undergraduates Grants 7,300 $25,000 15,000 10,000 0 8,500* Average amount 1989-90 20,000 5,000 7,000* 6,500 600 200 500* 1,100* 1999-2000 10,000 8,800* 1,700 3,1005,400* 1,800 14,700 16,000 1989-901999-2000 Public 2-year Proprietary, <4-year Loans *Represents statistically significant change from 1989-90. Family

13. 13 Percentage of Bachelor’s Degree Recipients Who Borrowed 100 80 60 40 20 0 65 49 Percent 1992-931999-2000

14. 14 Average Amount Borrowed Bachelor’s Degree Recipient Borrowers (Constant 1999 Dollars) $25,000 20,000 15,000 10,000 5,000 0 1992-931999-2000 19,300 12,100 Amount borrowed

15. 15 Average Monthly Payment (Constant 2001 Dollars) $250 200 150 100 50 0 19942001 210 160 Monthly payment

16. 16 Average Annual Salary (Constant 2001 Dollars) 28,300 $40,000 30,000 20,000 10,000 0 34,100 Annual salary 19942001

17. 17 Percentage Distribution of Loan Repayers by Debt Burden 31 50 40 30 20 10 0 Percent <5% 33 16 9 12 5-8%9-12%13-16%17%+ Median: 6.7 28 <5% 36 20 7 9 5-8%9-12%13-16%17%+ Median: 6.9 19942001

18. 18 Summary  Student borrowing continues to increase, especially unsubsidized Stafford loans and alternative loans  Largest increases in percent borrowing have been at the high income levels, while the largest increases in average amount borrowed have been at the middle-income levels  Grant aid has increased, but loans once again account for a greater percentage of total aid

19. 19 Summary (continued)  Price increases have been absorbed by increased grants and loans rather than current family outlays  For bachelor’s degree recipients, borrowing has increased, but salaries have increased and interest rates have declined, leaving debt burden relatively unchanged

20. 20 For More Information L. Berkner et al., 2003-04 National Postsecondary Student Aid Study (NPSAS:2004): Student Financial Aid Estimates for 2004 (NCES 2005-158) http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005158 L. Berkner et al., 2003-04 National Postsecondary Aid Study (NPSAS:2004): Undergraduate Financial Aid Estimates for 2003-04 by Type of Institution (NCES 2005-163) http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005163 Choy, S. and Li, X., Debt Burden: A Comparison of 1992-93 and 1999-2000 Bachelor’s Degree Recipients a Year After Graduating (NCES 2005-170) http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005170 Choy, S. Paying for College (NCES 2004-075) http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2004075 The College Board, Trends in Student Aid, 2004