The crush of college debt | Arkansas Blog

The crush of college debt



GOOD BUT PRICEY: College-acquired knowledge is spurring an increasing debt load.
  • GOOD BUT PRICEY: College-acquired knowledge is spurring an increasing debt load.
The New York Times today undertakes a major look at the enormous increase in college loan debt.

No reason to think the theme isn't applicable to college students here.

94 percent of college graduates nationwide borrowed money to complete their education, against 45 percent in 1993.

Average debt $23,000. Only 38 percent are making payments.

The extraordinary debt load is compared with the mortgage crisis, though a mass default isn't yet predicted. However ... Those loans are hard to pay off waiting tables, as many graduates interviewed in the article are learning to their despair.

State and federal spending for education, adjusted for inflation, is at a 25-year low. State and local support of students has dropped by 24 percent since 2001 while tuition at state schools has increased by 72 percent. See Arkansas where tuition increases shouldn't take long to eat up the (declining) value of the vaunted lottery scholarships. (State support continues to trend down here, with higher ed spending by the state dropping from 16.8 percent of total budget in 2009 to 15.9 percent in 2011, according to a national collegiate group.)

The decline in state spending on higher education has not been saved but spent on, among others, exponential increases in prison costs. Which is ironic, or something. Said the article:

The new financial reality for colleges has left administrators scrambling to maintain academic quality and all-important rankings with diminished state resources. That puts an even higher premium on attracting top-tier students — the rankings depend on them — and playing down the burdens of college debt.

Many students, the article says, don't have a firm understanding of the cost of college or the debt they'll incur. Colleges don't do much to educate them, not wanting to discourage enrollment. This is particularly true of the for-profit schools, where default rates are highest.

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