Many students graduate with manageable debt or no education loans, but almost 17 percent of graduates in 2008 borrowed $30,500 or more to get their bachelor's degrees, according to a new analysis.
A report released today by the College Board Advocacy & Policy Center, also said that students who borrow the most are disproportionately black, and are more likely to have attended a private nonprofit or for-profit college than a public four-year college. But debt levels did not necessarily reflect family income.
Over all, the analysis—based on data from 2007-8 graduates in the "National Postsecondary Student Aid Study"—revealed that about two-thirds of all those who received a bachelor's degree graduated with some amount of loan debt.
About 25 percent of all college-degree recipients graduated with at least $24,600 in debt, and 10 percent graduated with at least $39,300, says the report, "Who Borrows Most?: Bachelor's Degree Recipients With High Levels of Student Debt."
Borrowing by Income
A key finding by Sandy Baum and Patricia Steele, consultants to the College Board and authors of the report, was that debt levels at graduation among financially dependent students do not correlate to those students' family income.
"It's not the lowest-income students who are most likely to have debt," Ms. Baum said. "It's actually middle-income students who are slightly more likely than others to have high levels of debt."
She said, however, that it would be difficult to pinpoint exactly why that is so. Several factors, including the types of institutions that students from middle-income families choose to attend, could contribute to their higher debt.
Among bachelor's-degree recipients, independent students were also more likely to have high debt levels. About 24 percent of them had at least $30,500 in loan debt, twice the percentage found among students who depend on their parents or another guardian. "Independent students—who are disproportionately likely to come from lower-income families—are most likely to have high debt levels," the report says.
The College Board also analyzed the relationship between student debt and race, finding that black students were more likely than Asians, whites, and Hispanics to have high debt levels. Only 19 percent of black students graduated with no debt, while the percentage of debt-free graduates from other racial groups ranged from 33 for Hispanic students to 40 percent for Asian students. About 27 percent of all black students graduated with at least $30,500 in student-loan debt, while the portion of students with that level of debt ranged from 9 percent to 16 percent for other races.
Debt and For-Profit Institutions
The amount of loan debt that students graduated with also depended upon the type of institution they attended.
Thirty-eight percent of students from public four-year colleges graduated without student-loan debt, compared with 28 percent from private nonprofit colleges, and only 4 percent from commercial institutions.
Those from the commercial, or for-profit, institutions were more than twice as likely to have $30,500 or more in loan debt when compared with their peers from private four-year colleges and more than four times as likely to have that level of debt than their counterparts from public four-year institutions. About 53 percent of for-profit graduates had that high a debt load, versus 24 percent of those from private, nonprofit four-year colleges and 12 percent from public four-year colleges.
Despite the loan debt that students built up, Ms. Baum said, borrowing can be beneficial, as long as students make wise choices about whether or not a college fits with their financial resources, and whether they are taking out the best loans available.
"Borrowing for college makes a lot of sense, but some students seem to be borrowing more than they will be able to reasonably repay," she said. "It's better to realize that in advance than to realize that after you've already taken the debt."
According to the report, the problem is not that all students are borrowing too much, but that difficulties in predicting earnings after graduation, and students' lack of understanding about the financial impact of loans, leave too many of them borrowing more than they can manage.