The average amount of student loan debt that undergraduates have at graduation varies dramatically by college and state, according to a report about the class of 2016 released Wednesday by The Institute for College Access and Success. Average debt depends in part on schools’ financial aid policies, tuition and fees, cost of living and student demographics, the report finds.
With that in mind, prospective college students should research the amount of debt that graduates of various colleges typically have before committing to a campus, says Debbie Cochrane, TICAS vice president and one of the report’s authors.
“If students are looking into their college options and they see a school where most students leave with debt, and very high levels of it, that should be a red flag,” Cochrane says.
The report highlights the average debt for class of 2016 graduates of four-year, primarily public and nonprofit colleges that voluntarily report data. Only 52% of four-year public and nonprofit colleges that grant bachelor’s degrees reported data for the class of 2016, according to the report.
How to choose a low-debt college
Average debt at graduation for the class of 2016 was dramatically different depending on the colleges that reported usable data, ranging from $4,614 to $59,113, the report finds. Percentages of graduating students with any student debt also spanned extremes across schools, ranging from 6% of 2016 graduates with any debt at one college to 98% of graduates with debt at another.
Given this spectrum, students stand to benefit from choosing a college that will let them minimize debt. Here’s how.
1. Research prospective schools’ typical debt levels
Ideally, you’d graduate with zero debt. But since that’s not possible for most college students, it helps to get a sense of what’s reasonable to borrow. As a point of reference, some experts recommend limiting the debt you take on throughout college to the amount you expect to earn during your first year in the workforce after graduation.
Research the amount of debt you can expect to take on at different colleges using these two resources:
- TICAS data, which includes both federal and private student debt
- College Scorecard data, which only includes federal student debt
The TICAS data largely doesn’t include average debt levels for graduates of for-profit colleges because very few for-profit schools report data. However, “for-profit colleges are where debt levels are the most troubling,” the report says. Students considering for-profit schools should do extra research before enrolling. The College Scorecard does include data about for-profit schools.
2. Compare net prices at colleges instead of sticker prices
Don’t necessarily rule out colleges that have the highest total cost. A school that looks too pricey on paper could actually be more affordable for you than a seemingly cheaper option if the school offers generous grant and scholarship aid.
Colleges that are eligible for federal financial aid are required to provide a net price calculator online. Each school’s net price calculator will give you an estimate of what you’ll actually have to pay or borrow after grants and scholarships.
3. Submit the FAFSA to apply for financial aid
The Free Application for Federal Student Aid is the first step to getting grants, work-study and if necessary, student loans. NerdWallet’s FAFSA Guide has step-by-step instructions for completing the application.
Other report findings
- Colleges whose 2016 graduates had relatively high average debt loads aren’t doing as much as they could to help the neediest students. Of 60 colleges that reported their 2016 graduates’ average debt to be $40,000 or higher and that reported details about their institution’s grant spending, 26 schools (43%) say they doled out at least 20% of their institutional grant funds to students with no financial need.
- The average debt at graduation for the class of 2016 ranges from $19,975 in Utah to $36,367 in New Hampshire. States whose 2016 graduates had the highest average debt loads are generally concentrated in the Northeast and Midwest, while states with the lowest average debt amounts for the class of 2016 are largely in the West.
- Nearly 80% of 2016 graduates with state loan debt went to college in Texas, Minnesota, Massachusetts and New Jersey. While most private student loans come from banks, some states have loan programs that “have more in common with other private loans than with federal loans,” the report says. Like private loans, state loans lack crucial benefits that federal loans have, including access to income-driven repayment plans. Students should max out their federal student loans before taking on nonfederal loans, such as those from states or banks.
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