The price of a college education is still rising — just not as fast as it used to. An annual report by the College Board revealed that while the cost of college still soars, the amount of students borrowing loans has decreased dramatically.
At the height of the economic downturn, student loan debt, estimated to be at about $1 trillion, surpassed outstanding credit card debt for the first time in the nation’s history. Coupled with a burgeoning unemployment rate, student loans proved to be a difficult burden for many recent graduates to endure.
However, the economy seems to be recovering, and as things get back to normal college-goers are making more financially conscious decisions to avoid the initial student loan debt crisis of the recent past. Co-author of the College Board reports and college-finance expert at George Washington University, Sandy Baum, revealed that while this news may spell relief for a lot of American families, “…we should take that good news with some caution…,” stating that college pricing is cyclical, and that policymakers should think long term if they want to protect students from price spikes during another economic downturn.
With that being said, college costs still rose faster than the rate of inflation between 2013-2014 and 2014-2014, but those increases were far less than the average annual increases of the past 5, 10, and 30 years. Also, total student borrowing declined by 13 percent in 2014, which is the first decrease in nearly two decades.
Further, older students who had been borrowing to go back to school during the nation’s recession, are opting to work instead. And, traditional-age undergrads are now, more than ever, worried about the burdens of debt and are gravitating towards more affordable schools — with many of them choosing to attend in-state colleges, as indicated in the decline in enrollment at for-profit institutions and private colleges.
Since the decrease in borrowing is recent, it hasn’t yet reflected in a decline in the average amount owed by college grads. Sixty percent of graduates with a bachelor’s degree from a four-year public or private nonprofit university or college, graduated with an average of $27,300 in debt each — an increase of 13 percent over five years.
Here are some critical points from the College Board Report:
– Average borrowing per student declined by 9 percent in 2014.
– Total student borrowing, both federal and nonfederal loans, declined by 13 percent between 2010-11 and 2013-14. It had risen 18 percent in the previous three years, and had been on the rise since the 1993-94 academic year.
– In 2014, the average financial aid package for an undergraduate student was $14,180, including about $8,080 in grants, $4,840 in federal loans, and $1260 in education tax credits, deductions and Federal Work-Study.
Read more about the trends in higher education from The College Board.