Record debt for graduates: owe an average of $37,172

Record debt for graduates: owe an average of $37,172

Record debt for graduates: owe an average of $37,172

An analysis by Mark Kantrowitz, a higher-education expert and publisher of scholarship resource Cappex.com, reveals that borrowers in the class of 2016 will owe an average of $37,172, which would break last year’s record of just over $35,000. And although data from the National Association of Colleges and Employers suggests that the average graduate will find a job with a decent starting salary — more than $50,000 — student loan payments can resemble mortgages or car payments for years to come.

“Our country has come to rely on student loans so much more than people outside the education field realize,” says Lauren Asher, president of the Institute for College Access and Success, a nonprofit that analyzes student debt annually. “This has changed the way Americans are asked to pay for college. There’s been a shift away from state funding and toward putting more of the burden on individuals and families. Federal grants and state grant aid have not kept pace.”

The issue of student loan debt — and the costs of higher education in general — has been a key topic in this year’s presidential primary campaign, fueling Democratic candidate Bernie Sanders’ rise in popularity, especially among younger Americans who are likely to be dealing with loan repayments in the next several years. Sanders has suggested billions of dollars in federal subsidies and state spending regulations that he says would help move the country toward the goal of every student being able to attend college without paying tuition.

The average student loan balance has risen by about 78 percent since 2006, according to Kantrowitz. In 2014, the last year for which TICAS has compiled data, Delaware had the highest average student loan balance, at $33,808; Utah had the lowest figure, $18,921 (see a state-by-state breakdown). Perhaps even more startling, nearly seven in 10 graduates this year have financed at least part of their education with student loans; in 1993, that number was fewer than half.

A key factor in the steadily rising numbers, Asher says, is that states are covering fewer costs associated with getting an education. Many people wrongly assume that tuition and fees cover more expenses than they actually do. Frequently, the cost of books, housing, transportation and other necessities are not factored in.

“Student loans have become a necessity for more and more students to get through school,” Asher says, “and what’s not being talked about is the lowest income students are the most likely to have loans in default.”

Often, lower-income students choose to quit school, forfeiting the potential earnings boost that comes with a college degree. These dropouts make up an inordinate share of those who default on loans.

“We don’t have a student loan problem so much as we have a graduation problem,” Kantrowitz told theWall Street Journal. “If current trends continue, we may be at a crisis point two decades from now.”

It should come as no surprise, then, that one of the first suggestions Asher offers for bringing down some of the staggering numbers associated with student loan debt is straightforward: Finish school.

“It can be daunting for sure, but not graduating and having debt can be riskier,” she says. “Taking student loans in any amount is a serious commitment, and it’s important for students and their families to consider their options.”

More information alone, however, will not solve the problem, Asher says. Besides making it easier for borrowers to manage and repay their loans, she says more rigorous requirements for colleges to receive student aid are needed. California, for example, recently passed a law requiring its four-year colleges to report their graduates’ debt annually, which she says could help guide decisions on student aid; other states are considering similar measures.

“There’s still a lot we need to learn about what’s really happening for borrowers in all stages of the process,” Asher said. “It’s still very opaque, and it’s very important to recognize that federal student loans are a very different kind of financial product.”

Nevertheless, many experts remain convinced that a college education is a sound investment.

“College education benefits families, our economy and society as a whole,” Asher says. “What’s important to know is that while student debt has risen quite a lot over the last generation, you have to look behind the numbers and know that college remains one of the best investments you can make in your future.”