NOT ALL STUDENT DEBT IS CREATED EQUAL

NOT ALL STUDENT DEBT IS CREATED EQUAL

WHITE HOUSE REPORT ACKNOWLEDGES WHAT CSU HAS KNOWN FOR YEARS
by Mike Hooker

Colorado State President Tony Frank and other leaders in higher education long have taken issue with the broad-brush approach to the public discussion of student loan debt in the United States. Now, a new White House report affirms that despite rising public concerns about college student debt loads, students at four-year public universities have lower average debt and are better able to repay those loans than students who attend other types of schools.

The report also makes the distinction that students at for-profit institutions have seen a greater increase in borrowing for education and account for a disproportionate number of loan defaults, especially among those who don’t complete their degrees.

The new report released in July 2016 by the Obama administration – Investing in Higher Education: benefits, challenges, and the state of student debt – says that while aggregate student debt in the U.S. has grown to $1.3 trillion, the investment for individuals typically yields large returns. That said, the White House report identifies students at certain types of institutions – for-profits in particular – as major drivers of the highest debt and default figures, compared to public not-for-profit institutions like CSU.

At Colorado State University, for example, 44 percent of students last year graduated with no student loan debt at all. Among those CSU students who do have loans to repay, the average debt is around $22,000, significantly below the national average.

“Students at public four-year universities continue to see a great return on their investment in higher education and to graduate with lower than average debt loads – facts that are often missed in discussions about student debt loads overall,” Frank said.

“This latest White House report reinforces what we’ve been saying for some time: Public higher education continues to be a smart and affordable investment. We’re gratified to see this new report provide consumers and decision-makers with solid data to back that up.”

The White House report points out that average college graduates with a four-year degree will earn $1 million more over their lifetimes compared to a person with no college education.

Students at four-year schools are better able to pay back what they borrow for their education, the report says. “Borrower distress” is lower among students who complete their degrees at four-year public institutions such as Colorado State, where the loan default rate is 2.8 percent – and declining. That’s below the national average of 7.6 percent among four-year public institutions, and far below the average of 11.8 percent for all types of institutions combined.

While the report includes concerns about debt and default rates at community colleges, it singles out particular concerns with for-profit institutions, saying “relatively low returns at for-profit colleges are increasingly becoming a cause for concern, especially given the high rates of borrowing by students at those schools.”

It’s a distinction leaders like President Frank have been making for several years, saying the nuance is critical to understanding where schools like CSU fit in the overall debt equation.

“Despite what many people have been led to believe, on average, CSU students are graduating with debt that is manageable and graduating with a highly valued four-year degree that is positioning them well to be able to repay that investment and then go on to reap the substantial benefits of having earned that degree,” Frank said.

“As our leaders continue to look at this issue, we should pay attention to this data and focus our national conversation on the real problem rather than painting all of higher education with the same broad brush.”

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