Student Debt Rising Due To Higher College Costs

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September 7, 2005

Student Debt Rising Due To Higher College Costs

For Immediate Release: September 7, 2005

Contact: Lynn Erskine, 202-293-5380 x115

Washington, DC:  The average indebted graduating senior was $17,600 in debt on graduation day last year, according to a study by the Center for Economic and Policy Research. Nearly two-thirds of students attending a four-year public college or university take on student loans, and loans now comprise over half of financial aid packages, up from about one-fifth in the 1970s. 

The report, "Student Debt: Bigger and Bigger," found that expenses at public four-year universities have risen 59.4 percent since 1990, with private university expenses increasing 51.1 percent (adjusted for inflation). High levels of student debt are the result of rapidly increasing college costs and policy choices that have made more loans -- but not grant aid -- available to students.

"American students are graduating with more debt than ever. We are handing college graduates a bill for more than $17,000 when they receive their diploma," said Heather Boushey, CEPR economist and author of the study. "Working your way through college is no longer possible with such a low minimum wage and few grants available to students."

Analyzing data from the College Board and the National Center for Education Statistics' "National Postsecondary Student Aid Survey," CEPR found that students are taking on more loans to cover rising college costs. Another recent development has been the increase in nonfederal loans, of which the majority are private sector loans (94 percent in 2004) and the remainder are state government loans.

In 2003-04, graduates of public four-year institutions owed an average of $15,662 and graduates of private four-year institutions owed an average of $22,581. The report also found that students from lower-income families who attend public schools are one-third more likely to take on debt than students from high-income families.

In 1981, college students could work full-time all summer at a minimum wage job and earn about two-thirds of their annual college costs, leaving less than $2,000 (in inflation-adjusted 2004 dollars) that they needed to pull together from grants, loans, working during the school year, or their parents. Today, however, students earning minimum wage would have to work full-time for one year in order to afford one year of education at a four-year public college or university.

Higher levels of student debt have implications for how students think about career and life-choices. Highly indebted college graduates may choose to postpone marriage, buying a house, or starting a family in order to pay off their loans.

For access to the report see: "Student Debt: Bigger and Bigger."


The Center for Economic and Policy Research is an independent, nonpartisan think tank that was established to promote democratic debate on the most important economic and social issues that affect people's lives.