Student borrowing is down as tuition rises more slowly, study finds


Challenging the widely held fears that student debt continues to grow monstrously, new data show some financial good news for college students, particularly for those in California.

A College Board study released Thursday says that average student borrowing is declining and that tuition is rising more slowly than in the past. A separate report by the Institute for College Access & Success shows that graduates from California colleges owe among the smallest amounts in the nation, helped by generous state financial aid and the large numbers who attend public campuses.

Analysts for the College Board attributed the drop in student borrowing last year in part to the economic recovery, which is keeping older students in the workplace rather than in school for retraining; they traditionally borrow more than those right out of high school. Other factors, researchers said, may be government restrictions and enrollment dips at some for-profit schools where past debt loads had been unusually high.


Among the 7.8 million U.S. undergraduates who took out federal loans last year, the average amount was $6,670, which was $320 less than the previous year and $740 lower than 2010-11 when the decline began, according to the annual report by the College Board, which sponsors the SAT exam.

The number of undergraduates who took on loans last year was 6.5% less than the year before, far more than declines in college enrollment, the study found. Borrowing by graduate students also dropped.

“It’s definitely in the right direction. It’s a good trend,” said Jennifer Ma, a policy research scientist for the College Board and a co-author of the report. Student borrowing from banks and other private sources rose slightly but far from enough to account for the decline in federal loans, she said.

However, the annual change has not yet affected the total debt loads that recent graduates face, Ma said. At public four-year colleges, borrowers comprised about 59% of graduates in 2012-13 and their average total debt was $25,600, according to the College Board; at private nonprofit schools, 64% of the 2012-13 graduates had debt that averaged $31,200. Both groups showed small increases in total debt over the previous year’s graduates.

Meanwhile, the report by the Institute for College Access & Success shows that 55% of students who graduated from California colleges had some debt and that it averaged $20,340, far below the national average of 69% of students who graduated with an average debt of $28,400. Only New Mexico produced a lower total loan average for its graduates. (The Institute and the College Board use different methodologies and factors in their surveys.)

Strong financial aid in California, especially the Cal Grants, helped, as did the dominance of California public colleges and universities in enrolling more students than higher-priced private schools, according to Debbie Cochrane, the Institute’s research director. A proposal to increase UC tuition could affect future debt, she said.

Nationally, tuition continued to escalate but at lower percentages than in most previous years, the College Board report showed. One likely reason is that state governments are spending more on higher education and easing pressures on campus budgets that led to large tuition hikes in the recession, experts said. California’s three-year freeze on UC and Cal State tuition was a strong influence, although that could change in the UC system next year.

At public four-year colleges and universities nationally, the full price for tuition and fees, before financial aid is calculated, is up 2.9% to $9,139 for state residents this year. Including room and board, the total is $18,943, a 3% increase. Students at those campuses average about $6,110 in grants and tax credits to lower the bills, the College Board said.

Cal State’s total tuition and fees average $6,500, below the national average of similar master’s-degree-granting campuses: $7,968. UC’s current $13,200 for tuition and fees is above the $10,075 national average of doctoral-degree institutions, according to the report.

California’s community colleges, at $1,429, have the lowest costs nationally, compared with a $3,508 average across the country.

Tuition and fees at private nonprofit U.S. colleges rose 3.7%, to an average $31,231; with room and board, the total is up 3.6% to $42,419. Students at those schools average $18,870 in grants and credits.
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