STUDENT DEBT
MYTHS AND FACTS
Second Edition
April 2014
The Issue
Student loan debt is now approximately $1 trillion, and the delinquency rate for student loans has increased to 10 percent.
Critics are concerned that student loans may be the next financial bubble to burst and that borrowing for higher education is not worth the financial risks, especially for students who attend private institutions.
What is the truth? This presentation examines a number of myths about higher education student finance and sets the facts straight.
Council of Independent Colleges, April 2014
FACT
MYTH
In 2012, only 4% of all borrowers owed $100,000 or more in student debt. Many students owe more than $100,000 when they graduate.
The average debt level of bachelor’s degree recipients at independent colleges and universities is $19,500—less than the price of a modest automobile.
Council of Independent Colleges, April 2014
Average Total Student Loan Debt per Bachelor's Degree Recipient
$25,000
$20,000
$19,000 $20,000 $19,200 $18,200 $19,500 $18,000 $15,000
$13,900 $14,300 $13,000 $11,900 $11,900 $11,700 $10,000
$5,000
$0
2006‐2007
2007‐2008
2008‐2009
Public 4‐Year
2009‐2010
2010‐2011
2011‐2012
Independent 4‐Year
Source: The College Board, Trends in Student Aid 2013. Note: All totals are expressed in 2012 dollars.
Council of Independent Colleges, April 2014
FACT
MYTH
One quarter of students who graduated with a bachelor’s degree from a four‐year independent college or university did not have any educational debt. High levels of student debt make independent colleges unaffordable.
For those who borrowed, the difference between the median debt levels for graduates of public versus independent institutions is only $4,375.
Council of Independent Colleges, April 2014
Distribution of Total Undergraduate Debt
37%
No Debt
26%
12%
13%
Less than $10,000
9%
6%
Median Debt
14%
$10,000 to $19,999
of 2011‐2012 BA Recipients
Who Borrowed:
13%
11%
Public 4‐Year: $22,625
Independent 4‐Year: $27,000
For‐Profit 4‐Year: $33,900
16%
$20,000 to $29,999
20%
19%
9%
$30,000 to $39,999
13%
16%
10%
$40,000 or more
20%
35%
0%
5%
10%
Public 4‐Year
15%
20%
Independent 4‐Year
25%
30%
35%
For‐Profit 4‐Year
Source: U.S. Department of Education, National Center for Education Statistics. National Postsecondary Student Aid Study, 2011‐2012 (NPSAS:12). Analysis by the Council of Independent Colleges.
Council of Independent Colleges, April 2014
40%
MYTH
FACT
Only wealthy families can afford to send their children to independent colleges. Independent colleges enroll students of all financial backgrounds, and at about the same percentages as public institutions for low‐
and middle‐income students.
Council of Independent Colleges, April 2014
Student Enrollment by Family Income
15%
16%
14%
Less than $25,000
14%
14%
15%
$25,000‐$44,999
22%
17%
Public Nondoctoral
12%
12%
11%
11%
$45,000‐64,999
Public Doctoral
Private Nondoctoral
13%
13%
14%
14%
$65,000‐84,999
Private Doctoral
12%
12%
13%
12%
$85,000‐104,999
23%
32%
32%
35%
$105,000 or more
0%
10%
20%
30%
40%
Source: U.S. Department of Education, National Center for Education Statistics. National Postsecondary Student Aid Study, 2011‐2012 (NPSAS:12). Analysis by the Council of Independent Colleges.
Council of Independent Colleges, April 2014
FACT
MYTH
A larger proportion of students at independent colleges receive financial aid than do students at public institutions.
It is very difficult to receive financial aid at independent colleges.
Students enrolled at independent colleges are twice as likely to receive grants from their institutions as students enrolled at public institutions, and more than three times as likely as students at for‐profit institutions.
Council of Independent Colleges, April 2014
Percent of Undergraduates Receiving Financial Aid
100%
89%
90%
90%
83%
83%
80%
80%
73%
70%
64%
60%
51%
50%
40%
40%
39%
35%
30%
24%
20%
10%
0%
Any Financial Aid
Institutional Grants
Public 4‐Year
Federal Grants
Independent 4‐Year
Student Loans
For‐Profit 4‐Year
Source: U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics 2012. Note: Percentages for first‐time, full‐time undergraduates during academic year 2010‐2011. “Any Financial Aid” category includes state and local grants. Council of Independent Colleges, April 2014
FACT
MYTH
Students at independent colleges receive three times the amount of institutional aid as do students at public institutions, and five times as much as students at for‐profit institutions. Students at public institutions get more financial aid than students at independent colleges and universities.
Independent colleges give students nearly six times as much institutional grant aid as does the federal government.
Council of Independent Colleges, April 2014
Average Amount of Financial Aid
$35,000
$31,273
$30,000
$25,000
$20,000
$19,785
$19,515
$14,826
$15,000
$10,000
$8,733
$7,529
$5,134 $5,248 $4,875
$4,765
$5,000
$6,310
$2,872
$0
Total Financial Aid
Institutional Grants
Public 4‐Year
Independent 4‐Year
Federal Grants
Student Loans
For‐Profit 4‐Year
Source: U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics 2012. Note: Percentages for first‐time, full‐time undergraduates in aid programs during academic year 2010‐2011. “Total Financial Aid” category includes state and local grants. Analysis by the Council of Independent Colleges.
Council of Independent Colleges, April 2014
In fact, $30.0
Independent Colleges Give Students Nearly Six Times as Much Institutional Grant Aid as Does the Federal Government
$27.9
Grant Aid in Billions
$25.0
$20.0
$16.2
$15.0
$10.0
$10.1
$5.0
$4.7
$2.6
$1.9
$0.0
$1.3
$1.5
$1.4
2000‐01
2005‐06
2011‐12
Academic Year
State
Federal
Institutional
Source: U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System, finance component, various years. Note: Data represents grant aid awarded to students at Title IV, degree‐granting, U.S. private nonprofit, four‐
year institutions. Analysis by the National Association of Independent Colleges and Universities, Private Colleges: FactFile.
Council of Independent Colleges, April 2014
FACT
MYTH
On average, the actual amount students pay at private colleges is less than 60 percent of the total cost of tuition, fees, room and board.
All students enrolled at independent colleges pay the same high tuition (irrespective of family income).
Students with lower family incomes pay a much lower percentage of the total costs.
Council of Independent Colleges, April 2014
Average Net Price as a Percentage of Total Costs by Family Income
100%
96%
90%
90%
83%
60%
88%
83%
80%
80%
70%
95%
91%
75%
68%
68%
61%
58%
58%
55%
51%
50%
48%
47%
40%
30%
20%
10%
0%
All income levels
$0‐30,000
$30,001‐48,000
Public 4‐Year
$48,001‐75,000
Independent 4‐Year
$75,001‐110,000
$110,001 or more
For‐Profit 4‐Year
Source: U.S. Department of Education, National Center for Education Statistics, Student Financial Aid, Academic Year 2011‐12: First Look (Provisional Data). Analysis by the Council of Independent Colleges. Note: Total costs include tuition, fees, and room and board on campus for first‐time, full‐time undergraduates. Council of Independent Colleges, April 2014
Other factors to consider:
• Over the past decade, tuition and fees at public institutions have increased twice as fast as at independent institutions;
• The graduation rates at independent colleges are much higher than those at public and for‐profit institutions, even for low‐
income students;
• Students at independent colleges graduate much sooner (about ten months earlier) than do their peers at public institutions and 48 months earlier than students at for‐profit institutions—which means fewer years of paying tuition and a quicker start at earning a salary; and
• Graduates of independent colleges are far less likely to default on their student loans.
Council of Independent Colleges, April 2014
Inflation‐Adjusted Published Tuition and Fees from 1983‐1984 to 2013‐2014
350
Inflation‐Adjusted Published Tuition and Fees
Relative to 1983‐84
331
Public 4‐Year
300
Public 2‐Year
264
253
Independent 4‐Year
250
200
150
100
50
0
Source: The College Board, Trends in College Pricing 2013, Figure 5, page 14.
Note: Values for published tuition and fees by sector, adjusted for inflation, as a percentage of 1983‐1984 published prices.
Council of Independent Colleges, April 2014
Four‐Year, Five‐Year, and Six‐Year Graduation Rates by Institutional Type
70%
65%
62%
60%
57%
52%
51%
50%
42%
40%
40%
36%
32%
30%
20%
10%
0%
Four‐year
Five‐year
Public 4‐Year
Independent 4‐Year
Six‐year
For‐Profit 4‐Year
Source: U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics 2012. Note: Percentages are for entering cohort of 2005.
Council of Independent Colleges, April 2014
Four‐Year, Five‐Year, and Six‐Year Graduation Rates of Pell‐Eligible Students by Institutional Type
80%
68%
70%
61%
59%
60%
50%
47%
44%
40%
30%
24%
18%
20%
10%
0%
Four‐year
Five‐year
Public 4‐Year
Independent 4‐Year
Six‐year
For‐Profit 4‐Year*
* Four‐year and five‐year graduation rates for for‐profit 4‐year institutions are not available.
Source: U.S. Department of Education, National Center for Education Statistics, Beginning Postsecondary Students (BPS 04/09). Analysis by the Council of Independent Colleges. Note: A "Pell‐eligible student" is defined as any student who had accumulated Pell grants greater than zero by 2009. Graduation rates are calculated based on students who stayed at their first institutions from 2004 through 2009.
Council of Independent Colleges, April 2014
Time to Degree by Institutional Type
70%
65%
Median Time to Degree
Public 4‐year: 55 months
Independent 4‐year: 45 months
For‐Profit 4‐year:
103 months
59%
60%
50%
40%
38%
28%
30%
22% 21%
18%
20%
15%
12%
9%
10%
8%
5%
0%
48 months or less
49‐60 months
Public 4‐Year
61‐72 months
Independent 4‐Year
73 months or more
For‐Profit 4‐Year
Source: U.S. Department of Education, National Center for Education Statistics, 2008–09 Baccalaureate and Beyond Longitudinal Study (B&B:08/09): First Look. Note: Percentages are for 2007–2008 first‐time bachelor’s degree recipients; time to degree is calculated by number of months from enrollment in postsecondary education to degree attainment for first‐time bachelor's degree recipients. Council of Independent Colleges, April 2014
Federal Student Loan Default Rates by Sector 16%
13.6%
14%
12.9%
12%
9.6%
10%
8.3%
Independent
8%
6%
Public
5.2%
For‐Profit
5.2%
4%
2%
0%
FY2010
FY2011
Source: U.S. Department of Education, “Default Rates Continue to Rise for Federal Student Loans,” September 30, 2013. Note: Percentages represent two‐year cohort default rates (CDR).
Council of Independent Colleges, April 2014
For additional information about these facts and others that describe the quality and affordability of independent colleges, please see:
www.cic.edu/MakingtheCase
For questions, please contact:
Laura Wilcox, Vice President for Communications
lwilcox@cic.nche.edu
(202) 466‐7230
Council of Independent Colleges, April 2014