Student Debt Levels Often Higher At State Schools Than Elite Private Colleges, Analysis Shows

Student debt weighing on your mind? You might be surprised about where the worst of it comes from.

A recent Reuters analysis of student debt at various highly-ranked universities revealed that state schools often leave graduates with greater levels of debt than they'd get by attending Ivy League universities.

It all depends on what kind of financial aid programs the schools have to offer, according to Reuters -- and many state schools, feeling the public budget crunch that has swept the country in recent years, can't provide as much help to cash-strapped students. Tuition and fees at private schools four-year schools increased 28 percent in the last five years; meanwhile the in-state tuition at public schools soared 41 percent, according to data cited by Reuters.

The Reuters analysis could prove useful to parents and students attempting to navigate the waters of higher education and household finance. In an economic climate still largely characterized by high unemployment and modest wages, many families are facing hard choices about where their high school-age children can and should think about going to college.

More and more college students are borrowing to cover their tuition costs, according to a recent story in The New York Times, and more are discovering upon leaving school that their student debt will inform virtually all of their financial and life decisions for years to come.

Student debt can prove especially damaging to a recent college graduate because it's an obligation that can't be erased even in the event of bankruptcy. Meanwhile, vast numbers of young people who have graduated from college since the economic downturn hit are still struggling to find work, and those who have found jobs are likely to receive lower wages than people who entered the job market just slightly before them -- a wage gap that can persist for more than a decade.

The student debt crisis -- which many analysts fear could be leading to an unsustainable bubble in the country's economy -- is also sending historically large numbers of recent graduates back home to live with their parents after college.

From our partners

• How To Get Away With Being Bad At Your Job - The Billfold
• The Sharing Economy - LearnVest
• Uninsured: How To Get Health Care Without Insurance - The Billfold

Comments

[cattack]

05:18 PM on 05/18/2012

Filed under: not surprised.

[DOLSON]

05:07 PM on 05/16/2012

Ohio State Philosophy Major Having Second Thoughts in this week's News From the End of the World:

http://www.newsfromtheend.com/2012/05/ohio-state-philosophy-major-having.html

[Andre Harry]

12:11 PM on 05/16/2012

I think the thing to note here is, I picked a really crappy time to go back to school.

[Ed Forney]

08:01 PM on 05/15/2012

Ohio State is a good example. Millions made from their football program, and millions more from donations and estates, and tuition just keeps going up. Forget college. Grads can't find jobs either.

[yo drewski]

06:24 PM on 05/15/2012

There are plenty of things driving up college costs. Slashed public funding is a major problem, but it's not the only one. There's far too little emphasis on vocational programs, and there's very little willingness on the part of US businesses to emulate the German standard of apprenticeship. It works well for them, and our approach doesn't work well for us. There's the underlying assumption that parents will be the primary source of tuition payment, which worked when Ricky Nelson was college age, not so much when one year at a state school is a second mortgage. Too many students are admitted while requiring remedial courses, raising the question of why they're graduating from high school without attaining specific performance standards. Finally, there's a student loan system which puts an anvil on millions of students. Once again, we pay a lot and get not much for the price. We Americans seem to be good at that.

[tobereal]

11:31 PM on 05/15/2012

What is missing from your litany is logic.

For instance, how doe this contribute to higher college costs?

"There's far too little emphasis on vocational programs"

[Lisa Shields]

04:41 PM on 05/15/2012

Which is why my daughter LEFT our state.
The cost of a degree from Rutgers for an IN STATE student was higher than sending her to Massachusetts. And she has a sixteen to one student teacher ratio, instead of being taught in halls where hundreds of students get zero individual attention.

[chiefjat]

04:35 PM on 05/15/2012

I just wonder what the colleges are doing to rein in costs. Also, I wonder how many of the students with the huge debt have a degree that does not help them get a job. After all, how many fine arts major do we need.

[soli]

03:50 PM on 05/15/2012

Because of HP's restrictions, I had to split this comment.

...........
I went on to graduate school at a state university and received $3,000 per year on a research assistantship. (I think the kids, today, get something like $20+K for their assistantships.)
I had to pay my living expenses, including books and class fees from that, and also pay on my state loans while I was there.
Fortunately, my federal-loan repayments were deferred until I finished grad school.
I spent the next 10 years paying them off.

The first professional job I got out of grad school paid less than the 3rd-shift clean-up-crew job at a juice plant I had while finishing grad school.
Imagine that!

So, don't whine to me about the current plight of college students.
Sure...., times are tough, but they could be worse.
From what I've read, the proposed legislation on college loans does not present any unreasonable burdens to the students.
It even allows forgiveness of loans, which is unconsciable!

And..., as this article so sensationalistically points out, the cost of public colleges has risen proportionately faster than private colleges, but what are the real numbers?
Do public colleges cost more than private ones, or is this just more media and Obama BS?

[PPPELOSI]

04:19 PM on 05/15/2012

Thank you for a very informative personal account. I had a similar, although less challenging experience, getting my degrees. And after grad school and military service I had to take several years to pay off my loans as well. My parents could afford very little so it was really up to me - scholarships, loans, and work both during the summers and while in college. My summers often consisted of one job from 7AM until 4:30PM, then another from 6PM until 10PM - both factory work. I treasured Saturday nights.
Reality can be difficult for all of us to get back to.

[yo drewski]

06:01 PM on 05/15/2012

Pardon me, but if you tried to sound any angrier or more resentful, I doubt you could manage it. You clearly don't understand some differences between your experience and current reality. This is a crap economy. You blithely assume that there are jobs to be had for the picking. Not so. Even if an undergrad works, remember that their parents are still likely to be involved in their tuition. That means the student will likely be listed as a dependent, which means that a student making $15k a year would likely pay higher taxes (as percentage and in absolute terms) than an adult making 2-3 times as much (if not more).

You ignore the possibility that a school might want a student to participate in their work/study programs before seeking other work. You ignore the fact that the interest rates on student loans are higher than a mortgage. You ignore the fact that ANY student loan debt in this job market has the potential to be a crippling liability; it wasn't like that a decade or two ago, certainly not on the current scale.

Your comment about your first professional job...yes, imagine that a PROFESSIONAL like you might make less to start than third-shift cleaning staff with maybe 20+ years on the job. Yes, that happens--as you said, dripping with contempt--imagine that!

[soli]

03:47 PM on 05/15/2012

I have grown so tired of hearing all the bitching, whining, and moaning about the costs of college and student loans.
As much as people complain about the job market, a GOOD education is still a good investment.

I grew up with 3 siblings in a lower-income family.
We never got everything we wanted, but we never went hungry or had to wear dirty clothes.
Our parents were very good about that.

From the time I was little, my parents instilled in me a drive to work and to save my money so that I could attend college.
All through junior high school, high school, and when I was home from college on breaks, I worked a regular job after school and on days off, and worked for local farmers making hay or attending to livestock until the middle of the night.
While at college, I took a full load of courses, but still worked at "menial" jobs to help support myself.

I used that money, and state and federal grants and loans (for which I filled out all of the applications) to attend a private college in the early 1970s.
The cost of tuition, room, and board rose from $19,400 to $27,000 per year during the four years I was there.
My parents had to pay only $685 in college expenses for me in my last year.
I felt good about that. Their job was to raise me to age 18. Anything after that was up to me.

[LateDave]

03:44 PM on 05/15/2012

The story may be a little (or a lot) misleading. I believe (as opposed to "I know") that the majority of students at public, endowed/private, and for-profit schools pay their way by spending savings or incurring debt. The most highly desired students--high school and prep school stars--are lured in by the schools with scholarships. Many of the private schools have bigger endowments, so they can pay for more students, but still not the preponderant number (except the service academies). The privates also reject most applicants.

The takeaway should be that *most* students or their parents will be in big debt or cash-depleted by graduation day. This story implies that private schools don't do this to the same extent, but IMHO the worst by far are the for-profits, followed by the privates, with a four-year public stint being cheaper on average, and a two-year community college followed by two years at the public university being the cheapest--again, on average. Note that at least Maryland guarantees admission to *any* four-year state school for *every* graduate of the CC system. Private school admission is much less likely.

The looming disaster is the cutbacks (particularly in red states) on tax-sponsored underwriting of the community and state college system. This is a short-sighted war on smarty-pants, to my cynical mind--jealousy and selfishness by self-described religious enthusiasts.

[Nalani54]

03:39 PM on 05/15/2012

In Hawaii it's not the education that lands you the job, its who you know that gets the position.

[1studmuffin]

03:10 PM on 05/15/2012

And, Oh bye the way and in my experience, many Ivy League grads have well heeled parents.

[tobereal]

11:35 PM on 05/15/2012

Many, but you don't have to these days.

The amount of aid given is very high, but few people who don't come from a family background where people typically go to the elite schools, or are not around others who do/have done so, just don't realize this.

[Meka Mimi Brooks]

02:35 PM on 05/15/2012

This really doesn't surprise me at all. Honestly, me and my friends would really sit and wonder how the hell Penn State cost more money than half of the private schools our friends went to. Ridiculous. -__-

[beckym1488]

02:28 PM on 05/15/2012

I am not surprised by this at all.

[CalSailor]

01:12 PM on 05/15/2012

Having a niece trying to figure out where to go, that doesn't surprise me.. In my experience, kids with very modest resources for college, unless they are able to earn a scholarship for an outstanding skill and/or academic talent, don't even try for expensive private colleges--even though that's their secret dream. Instead, they attempt to maximize the resouces they have via community colleges and state schools. But even state two and four year colleges are not cheap. Since they don't have wealthy parents to loan them the money (contrary to Mitt's "bank of dad" assumption), they settle for state, but even so, run up a lot of debt. Even at state colleges, in-state tuition and fees can be more than $5k per semester; some are even higher. Going out of state can mean some severe costs. It's more expensive than the state colleges, which are the fall-back position. If they stretch, it will often be to a well ranked state college or university in another state. Paying for school especially at 2 courses/semester while working full time, pilles up debt. This means finishing college is a, long, difficult haul for these kids.

I'm maximizing my help to my niece; and hope that her younger sister really will make it either to the next Olympic team, or to a college team on scholarship. (at 13, she's ranked 37th of 450+ total competitors in gymnastics at the regional level...)

Pr Chris

[meat-a-saur-us]

02:42 PM on 05/15/2012

Good grades are not enough. My Son was a 4.00 student, and he GOT scholarships, but they don't add up to enough. He still will owe over $40K from the State University for his Engineering degree. Granted, engineering is a higher paying job than many starting out, but there are so many candidates that applied for the Summer internships he was up for, that again it is just a matter of time before he will have to move home and possibly work Walmart & McD's because those loan payments will kick in in November......when you have 1 or two positions open, and you get over ONE THOUSAND qualified applicants (and this is all over for engineering), something is wrong. According to his university, the number of candidates has not gone up, but the number of jobs to be filled has TANKED.