NEW YORK (MainStreet) — College is supposed to be a tool for a better future, but new data suggest the cost of college is putting many students’ financial futures in jeopardy.
The majority of college graduates (60%) borrowed money to pay for their education in 2008, compared to about 52% in 1996, according to an analysis of data from the National Center for Education Statistics by the Pew Research Group.
More troubling though is the fact that students borrow substantially more money to pay for college today.
The average loan taken out by students who earned a four-year bachelor’s degree was $23,000 in 2008, an increase of more than a third from the $17,000 borrowed on average in 1996.
According to the Pew report, “Three trends contribute to the increase in average borrowing by students: a greater share of students is choosing to borrow; students who borrow are borrowing larger amounts; and students are attending a different mix of schools.”
Pew Research found that more students flocked to for-profit universities in recent years, which are typically more expensive than public schools and not-for-profit universities. These for-profit colleges awarded 18% of all undergraduate degrees in 2009, compared to 14% in 2003.
The downside of this trend is obvious: More than half of all students (54%) who graduated with a bachelor’s degree from a private for-profit university had more than $30,000 in student loans, while just 12% of those graduating from public schools did.
To some extent this should come as little surprise to our readers. Recent reports show that the cost of college tuition continues to increase from year to year and there are now exactly 100 universities nationwide that charge $50,000 or more for tuition, the vast majority of which are private schools.
As we reported earlier this year, the steady increase in college loans has also been a leading factor in the rise of personal debt among consumers, which now stands at nearly 10 times the level it did in the 1950s.
In recent years, families around the country have begun to view college as a requirement for their children, rather than a luxury, which means parents and students are willing to incur more debt in the name of a university diploma. The result is that the nation’s student loan debt is now higher than credit card debt.
Perhaps the best way to minimize the shock of tuition costs is to begin saving for college from day one of your child’s life. Check out these MainStreet articles for advice on how much you should aim to put away for your kid’s college fund as well as tips on where to find the best scholarships and grants.
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