by Mitch Kokai
Senior Political Analyst, John Locke Foundation
This year, outstanding student loan balances reached an all-time high of $1.12 trillion – an increase of $124 billion since last year, according to the New York Federal Reserve. Nearly 11 percent of aggregate student loan debt was at least 90 days delinquent or in default, as Politico reported last week
College graduates now leave school with an average of $26,500 in student loan debt – $4,600 more than the average student graduated with in 2001. Federal subsidies now account for 71 percent of all student aid. According to the College Board, over the past 10 years, the number of students borrowing through federal student loans increased by 69 percent.
Increases in debt have been driven by increases in college costs. In the last 30 years, inflation-adjusted tuition and fees at private colleges increased by 153 percent. Tuition and fees at public universities for in-state students increased 231 percent.
College costs have risen more than health care costs—by some estimates, twice as much—and faster than increases in the price of food. State-level spending has increased 88 percent since 1999.
Increases in tuition and fees over the past 30 years suggest that growth in federal subsidies such as loans and grants has done little to mitigate the college cost problem. And all of this spending and debt is not producing adequate outcomes:
• The 6-year college graduation rate stands at 59 percent. Just 41 percent of undergraduates complete college within 4 years.
• According to the Center for College Affordability and Productivity, 48 percent of working college graduates held jobs that did not require a college degree in 2010. Thirty-seven percent were in jobs that only required a high school diploma.