Rhode Island has 4th Largest Average Student Loan Debt in Country
Monday, November 12, 2012
The average college graduate from the class of 2011 in Rhode Island left school with nearly $30,000 in student loan debt, according to a report released last month by the Project on Student Debt at The Institute for College Access & Success (TICAS).
At $29,097, Rhode Island ranked No. 4 in the country when it comes to the largest average student loan debt, ahead of all New England states except New Hampshire, which ranked No. 1 overall at $32,440. The rest of the top five included Pennsylvania ($29,959), Minnesota ($29,793) and Connecticut ($28,783).
The report found that the average graduate nationwide in 2011 finished with $26,600 in student loan debt, up from $25,250 in 2010. About two-thirds of the Class of 2011 had loans, and private (non-federal) student loans comprised about one-fifth of what they owed. In Rhode Island, 69 percent of students graduated with at least some loan debt.
“In these tough times, a college degree is still your best bet for getting a job and decent pay,” said TICAS President Lauren Asher. “But, as debt levels rise, fear of loans can prevent students from getting the education they need to succeed. Students and parents need to know that, even at similar looking schools, debt levels can be wildly different. And, if they do need to borrow to get through school, federal student loans, with options like income-based repayment, are the safest way to go.”
Rising Cost of Education a Problem
That fear of taking out loans in only enhanced by the increasingly bleak job prospects for young college graduates. According to the report, the national unemployment rate for those who recently completed school was 8.8 percent in 2011 while a significant number of young graduates were underemployed, working just part-time or in lower paying jobs that did not require a college education. In Rhode Island, the overall unemployment rate was 10.5 percent in September.
“It hasn’t been easy at all,” said Derek Ryan, a graphic designer who only recently found his first “adult” job after graduating from the University of Rhode Island in 2010. “I considered moving to Boston, but I couldn’t afford an apartment up there. I stayed here and I guess I got lucky.”
While college graduates remain far more likely to find work than those without a college degree (the unemployment rate for young high school graduates was 19.1 percent in 2011), college admissions advisors say the rising cost of going to college is problematic.
“While we can talk at length about building awareness about the pitfalls of unmanageable student debt, this is ultimately a much broader question of affordability,” said Simon Moore, the executive director of College Visions, an organization which advises inner city students on the college application process. “Young people have tremendous incentive to pursue higher education and the Obama administration wants to increase the number of degree holders in the US. But as a society we haven't had the difficult questions about how to fund this.”
Moore said the typical College Visions student is the first in their family to attend college and comes from a family with an annual income of approximately $25,000. He said the majority of students his organizations advises do not have parental help with their loans and many are often expected to give back to their families as the first ones to have access to professional positions and a living wage.
“The multigenerational impact of degree attainment is put at risk when we're more and more often asking low and middle income students to mortgage away their futures to pay for college,” Moore said.
Loans Won’t Go Away
And once students take on debt, there is very little wiggle room when it comes to paying it back, whether they complete college or not. Earlier this year, GoLocalProv reported that nearly one in every ten students from Rhode Island colleges who began paying back their federal loans in fiscal years 2009 or 2010 has already gone into default on their loans.
In an interview earlier this year, Laura Gustafson of Forbes Financial Planning told GoLocalProv that falling behind on student loans can result in wage garnishment, the withholding of federal and state tax returns and a lower credit score. In other cases, parents or family members who co-sign for loans have been known to be targeted by collectors, she said.
“Bottom line, don't default,” she said. “If you're in a tough financial situation where you are considering bankruptcy, negotiate with the student loan lender to restructure your monthly payment. Chances are that the loan will not go away so you want to remain in good standing.”
Report Suggests More Transparency
Last week, Rhode Island’s state colleges received a boost when the Board of Governors for Higher Education voted to freeze tuition for the 2013/14 school year, but many of the problems with college affordability come from the federal level, according to the report.
The report’s main recommendation is to increase transparency when it comes to the actual cost of an education. The report suggests the federal government should provide key information that students and families need to make wise decisions, including the average debt at graduation at all colleges that receive federal funding.
The report also suggests reducing the need to borrow by increasing need-based grant and tax aid and to curb “unnecessary risky borrowing” by requiring school certification of all private loans.
“Voluntarily reported data is all that we’ve got to shed light on how debt at graduation varies from school to school and year to year,” said Matthew Reed, the report’s primary author. “Students need reliable information for all schools, and colleges that consistently and accurately provide their own debt figures deserve a level playing field. Twelve percent of the colleges that reported debt data for 2010 didn’t report for 2011, and virtually no for-profit colleges reported at all. The need for federal collection of key debt information at all colleges could not be more clear. ”