Student loan debt hits new record
Recent college grads owe more than $26,000 on average, and more than a third of them are working in jobs that don't require a college degree.
This post comes from Scott Cohn at partner site CNBC.
The average college student who graduated in 2011 had $26,600 in student loans, according to a new report, which estimates that two-thirds of last year's graduates left college with student loan debt.
The average debt is the largest since the Institute for College Access and Success began compiling the figures in 2005, and it comes amid soaring college costs, record loan defaults and a persistently difficult job market for college grads.
While unemployment among college graduates is only slightly higher than the overall rate, the study found a stunning 37.8% of recent graduates are working in jobs that do not require a college degree. The study said that means wages are depressed, making the situation for graduates even more difficult.
"Recent college graduates have entered an enormously difficult job market, which poses particular challenges for those who need to begin paying back student loans," the study said.
Indeed, the report cites recent U.S. Department of Education data that show the federal student loan default rate at its highest level in 14 years. The New York Federal Reserve recently reported that more than 5 million student loan borrowers have at least one loan past due.
For the Class of 2011, the study said, graduation has been an especially rude awakening. "Most students in the Class of 2011 started college before the recent economic downturn, but the economy soured while they were in school, widening the gap between rising college costs and what students and their parents could afford," the study said.
The nation's soaring student debt -- which recently topped $1 trillion -- has sparked debate over whether a college education is worth the price in the current job market. But the study noted that the unemployment rate for young workers with only a high school education is more than twice the rate of their college-educated counterparts.
Compounding the problem, the study said, are state budget cuts, which have led to large tuition increases, fewer grants, and an increasing need for college students and their families to borrow money to finance their education.
The study found wide variations in indebtedness from state to state, with the largest debts concentrated mostly in the Northeast.
The most indebted state is New Hampshire, with an average debt of $32,440, followed by Pennsylvania at $29,959, Minnesota at $29,793, Rhode Island at $29,097 and Connecticut at $28,783.
The state with the smallest average debt is Utah at $17,227, followed by Hawaii at $17,447, California at $18,879, Arizona at $19,950 and Nevada at $19,954.
The study found the highest average debt for a public college is at Alabama A&M University in Huntsville, while the highest-debt private nonprofit college was the College of Mount St. Joseph in Cincinnati.
The study found 20 colleges it listed as "low-debt," averaging between $3,000 and $9,750. While it did not rank the colleges by debt level, the list includes Yale University, Hunter College in New York and the California State University campuses in Bakersfield and Sacramento.
Missing from the study are for-profit colleges, which critics say have worsened the student debt crisis. The study cited data showing 96% of graduates from four-year, for-profit colleges took out student loans, borrowing 45% more than graduates of other types of colleges.
But the study said so few for-profit colleges report their data that it is impossible to include them in the results.
More from CNBC and MSN Money:
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- Should college students have a credit card?
- Colleges that bring in the highest paycheck 2012
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- Angst, indecision for college voters
- Will I be able to pay back my student loans?
VIDEO ON MSN MONEY
This once again boils down to greed. The schools are charging higher and higher costs but as the years go by that is to be expected, because thats what most businesses do. Second theres no real grants being offered because of the restrictions in place. For instance for me Im an adult and even if I was a younger person my parents could not afford to put me through college, therefore its my responsibility, but the government is expecting parents to foot the bill, well hello Im almost 50 thats not going to work. Im being told because of a lousy $2,000, I cant get ANY grants especially a pell grant because I make over $23,000, and Im not a pauper with a bunch of kids. Second they need to change the ratio of the poverty level because of the way everyone changes the cost of living. The cost of living is up 6.5%!!!! My job offers me 1.5%. whats wrong with that picture? There are people that are not seeing things as they are, and are writing or wanting to see what they wonna see for their own benefit. We need to help each other and see whats real and work together as a country or its not going to work. Theres no point in going to school, when there are NO jobs out there and the ones that are, these companies are being very PICKY about who they hire, instead of qualifications.
If reelected Obama will want to forgive these student loans. I helped my kids through college and they too have student loans to pay, but they made the debt and they will pay them off.
And the kids.....keep getting more and more in debt.
When you hear some sleazebag politician bragging about how he's increasing student loans...all he's doing is perpetuating the cycle and letting his pals at the colleges get away with even more outrageous tuition hikes. The students are getting nothing out of the loan increases. The colleges just raise their costs.
"If reelected Obama will want to forgive these student loans. I helped my kids through college and they too have student loans to pay, but they made the debt and they will pay them off."
But it's okay for hired-in executives to blockade job hiring to keep those graduates out and cherrypick the kids of Republicans to fill those roles, able or not? Get the Hell out of America, will you!
I also strongly believe that the required course loads need to be revamped to include only courses relevant to the degree. Students should not have to waste their money on PE, philosophy, and foreign language for an Accounting degree. Those things are nice in theory, but kids shouldn't be forced to take out loans for them.
"what they should do is make mandatory retirement for the geezers staying in their jobs till 50-60 years old and place college students in those positions."
That would be unfair. What they should do is create a This is Your Life, for those deadbeats and show them how pathetic their time on Earth has been. Drinking and smoking problems, broken marriages, kids who won't talk to them, bitter narrow-mindedness on the job. Everyone is at fault except them. It should then be shown to the 60+ year old loser still doing secretarial work AND the kid thinking about replacing them. Meanwhile... there's a rich prson who can't tie their shoelaces relying on that person.
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