Notes on U.S. College Debt

Lately, I’ve becoming more and more interested in the rapid rise of student related debt in North America. I thought I’d share some of the key notes.

  • All in, students owe over $1 trillion due to college educations. In August 2010, the volume of college related debt exceeded credit card related debt.

  • As shown below, Student debt has grown 511% since 1999. The graph below plots this as red, compared to the housing bubble (blue line).

  • Yes, that blue line really is the housing bubble that triggered a major meltdown.

  • As you can see, the U.S. has gone from around $90bn in student debt (1999) to over $550bn in student debt (2011).

  • The average debt per student on graduation is $23,186, as compared to $13,172 12 years ago.

  • Clearly the intake of students has not increased by 511%; this debt intake becomes much clearer when looking at the average 4-year college cost.

  • This graph stops at 2006, with an average college cost of $120,000.

  • The rather concerning trend line is the average increase in 4 year college education costs (including living), when compared to to the average increase in general goods and services.

  • With rising costs, I was interested in looking at what type of debt students were generally taking.

  • Note that this graph does not account for convenience users.

  • Comparing 2004 to 2008, student Credit Card debt increased on every key metric. At least 30% of college students are putting tuition related expenses on credit cards.

  • Taking a look at samples, Loyola University, North Dakota and Kentucky State have averages of 77%, 85% and 76% of their students paying tuition via loans respectively. Both North Dakota and Kentucky have average tuitions of under $8,000; clearly this is not isolated to high price institutions.

  • Part of this trend is due to students receiving less financial support from parents. Surprisingly, the average family with children in college spends more eating out ($3,102) than supporting education ($2,055).

  • The following graph compares cumulative College Credit to Insurance, Auto, Mortgages and other key financing arenas:

  • As Daniel Indiviglio points out in The Atlantic, mortgages and home equity have increased threefold since 1990, as has household related debt. Meanwhile, student debt has grown six-fold.

Sources: Chart of the Day: Student Loans Have Grown 511% Since 1999, The Atlantic

Let College Students Get Into Debt, The Atlantic

The Debt Crisis at American Colleges, The Atlantic

Student-Loan Debt Surpasses Credit Cards, Wall Street Journal

Students Borrow More Than Ever For College, Wall Street Journal

Student Loan Debt Climbs, Wall Street Journal