Texas Comptroller Susan Combs released a report today examining the growth of college tuition costs and its impact on student loan debt.
In Footing the Bill: Rising College Costs, Deepening Debt, the Comptroller’s office details impacts of student loan debt; factors driving increases in tuition costs contributing to this debt; reasons students have remained willing to incur these debts; and potential ways to slow the growth of higher education costs. The Comptroller also makes recommendations for the Texas Legislature to improve transparency in this area.
“A college degree is a basic requirement for many jobs, and a benefit that provides real financial advantages throughout life,” Combs said. “That’s why it’s disturbing that the price of higher education seems to be climbing out of reach for many Texans. If college becomes possible only for the few, our young people and our nation will suffer for it. Our kids will find themselves squeezed out of their best chance for financial success, and America will miss out on the productivity and innovation of many of our best minds.”
Student loan debt payments often take a large share of graduates’ salaries. For Texas-educated college graduates under 30, the average loan-debt balance was $22,600, or 46 percent of average yearly earnings ($49,112) in 2011. In 2012, about 20 percent of student loan debt holders in Texas were more than 90 days delinquent on their debt. The most recent figures indicate that 14 percent of all federal student borrowers were in default within three years of leaving school, according to the U.S. Department of Education.
Financial experts say student loan debt could significantly reduce economic activity and demand for mortgage credit and negatively impact the broader economy by inhibiting entrepreneurship and the creation of small businesses.
The growth in student loan debt is mirrored by the growth in the cost of attending college. In Texas, average in-state public university tuition and fees rose by 90 percent between 2003 and 2012. Yet despite rising tuition costs and student loan burdens, enrollment in Texas degree-granting institutions rose 49 percent from 2000 to 2012.
Because college is usually a good return on investment – college graduates earn about twice as much as those without a college degree – this uptick in enrollment is expected to continue, making it imperative for students to know how their tuition and fees are spent, and to have better access to tools to help them get a full picture of college costs.
To help ensure the price of higher education remains in reach for Texas students, Combs makes several recommendations in the report. To learn more, visit the full interactive report at www.window.state.tx.us/specialrpt/student_loan.