New graduates are leaving college with more debt, but their starting salaries at new jobs are not keeping pace with their debt, a new study by the Project on Student Debt indicates.
The study, “Student Debt and the Class of 2006,” found that the nation’s average student loan debt for seniors graduating from four-year institutions increased by eight percent from 2005 to 2006, while the starting salary for recent college graduates rose only four percent.
The average debt of students in the graduating class of 2006 was about $20,000.
“It puts families in a bane because they know that a college education is a ticket to being part of the middle class, but large debt spells trouble,” says Robert Shireman, executive director of the Project on Student Debt. “We need to make college available by making Pell grants, grant aids and helping people who have taken loans.”
The report includes a list of colleges and universities that have high and low debts. Graduates from institutions in Washington, D.C. and New Hampshire face the highest debt levels, $27,757 and $24,800, respectively. Hawaii graduates had the lowest average debt at $11,758.
Included in the list of high-debt institutions is historically Black Alabama State University and Bethune-Cookman University in Florida.
Devon Quash, an alumnus of Bethune-Cookman, is an example of the trend revealed in the study.
“I graduated in 2004, and I am still paying debt,” says Quash, who graduated with $40,000 in debt. “A lot of kids think that because they have a degree they can get a job but the doors don’t automatically open; you have to open them for yourself.”
Quash, who graduated with a bachelor’s in mass communications works as a coordinator of alumni affairs at Bethune, hopes to pay off the loans in two more years.
Though high tuition costs are associated with high debt, the study states that another contributing factor is the lack of data systems at some institutions to track students’ debt.
“It’s time for colleges and data collectors to treat [this as a national problem] and provide more thorough, accurate information,” says Shireman.
The group recommends that colleges and universities counsel students about financing options, particularly the realities of repaying loans after graduation and the risks of private educational loans. States and institutions should award their grants based on need rather than merit, according to the Project on Student Debt.
Several initiatives the group is making, Shireman says, include rallying for the president to sign the College Cost Reduction and Access Act, a bill that would make college more accordable.
The bill raises the maximum Pell grant from the current $4,310 to $5,400 by the 2012-13 academic year. It also cuts rates on federally subsidized loans from 6.8 percent to 3.4 percent by 2011. Borrower repayments generally would be limited to 15 percent of discretionary income.
The bill was approved by Congress and is expected to make it to President Bush’s desk this week.
The study was based on data from more than 1,400 colleges and universities across the country and was supported by The Pew Charitable Trusts, the William and Flora Hewlett Foundation, the Bay Tree Fund and individual donors.
The Project on Student Debt is part of the Institute for College Access & Success, an independent, a nonprofit organization that works to make higher education more available and affordable for people of all backgrounds.
– Margaret Kamara
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