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For
Immediate Release:
March 7, 2002
Contacts:
Tracey King
Ellynne Bannon
(202) 546-9707
Student
Loan Debt is a Ball and Chain for Many Graduates
PIRG analysis shows that many student borrowers are graduating
with unmanageable levels of debt
An estimated
39% of student borrowers are graduating with unmanageable
levels of student loan debt, according to "The
Burden of Borrowing," a new report by the state PIRG's
Higher Education Project. The analysis, based on data from
the Department of Education's National Postsecondary Student
Aid Study, also shows that the average debt among student
borrowers has nearly doubled in the past decade to $16,928.
Unmanageable
debt is defined by a loan industry recommendation that monthly
student loan payments not exceed 8% of a borrower's monthly
income. The analysis was based on data from the 2001 U.S.
Census, which listed the average income of 18 to 24-year-olds
with Bachelor's degrees working full-time and year-round in
2000 at $32,101.
"Too
often debt burden becomes a ball and chain for student borrowers
after graduation. Many student borrowers are taking on unmanageable
levels of debt to finance a higher education." said Tracey
King, the State PIRGs' Higher Education Associate.
The report also found that some groups of students are disproportionately
likely to face debt burden. For example, 71% of students from
families with incomes less than $20,000 graduated with debt,
compared to 44% of students from families with incomes more
than $100,000. In all likelihood, low-income students more
often also experience financial hardship after graduation
due to less financial support from and more financial obligations
to their families after graduation.
"Debt
levels are skyrocketing, and as a result, many students are
graduating with unmanageable debt burden. The situation is
even worse for certain groups of students, who are likely
to experience even more difficulty repaying their loans,"
said Tracey King. "Congress should take immediate action
to protect these students from dangerous debt burden by increasing
grant aid funding and making student loans more affordable,"
added King.
King also
noted that the figure for students who graduate with unmanageable
debt burden is a conservative estimate because it does not
factor in other types of debt, such as private loans and credit
card debt. In addition, monthly payments for half of all student
borrowers are even higher due to interest capitalization on
unsubsidized loans.
State
PIRGs are non-profit, non-partisan public interest advocacy
groups. The Higher Education Project was established in 1994
to secure more aid for students, with a focus on additional
grants, reduced debt, and better service to students in the
federal financial aid system. www.pirg.org/highered
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