The Perfect Strom

For-profit two year BROUGHT TO YOU BY The Perfect Storm edulender institutions 27% 37% DEBT DEFAULT THREATENS TO SWAMP STUDENT BORROWERS 36% Today's college graduates face challenges that threaten to drive up the rate of default on their student loans: the rising cost of college, record levels of debt, and high unemployment. Little wonder that more than 4 borrowers in 10 are either delinquent on their student loans or default on them outright. How did America's graduates get here? How can they weather the storm? "Compared to other types of colleges, for-profit colleges have the dubious distinction of the highest share of students with debt, with the highest debt levels for degree completers, the worst federal student loạn default rates, and the lowest completion rates for bachelor's degree programs." 29% 36% 40% Private, nonprofit four-year 47% institutions 24% 24% 24% - Lauren Asher, President, The Institute for 20% College Access and Success 66% 10% 8% Public two-year institutions For-profit four year institutions 73% Public, four-year institutions CLASS OF 2011 O Students in default Students in delinquency O Students on track to pay on-time (includes those in deferment and forebearance) RISING COSTS FEWER JOBS Between 2008 and 2009, costs Since 2007, the unemployment associated with tuition, dorm rate for recent college graduates rooms, and board all increased has climbed from 5.8% to 9.2%. sharply, while income actually HIGHER DEBT 4.8% '08-'09 change: tuition + fees fell. 9.2% 8.8% Since 2008, the average student debt of college grads has risen from $20,500 to $22,900. The class of 2011 will be the most indebted in American history. "08-'09 change: 5.5% Generally, since 1982, the cost of dorm room costs a college education has 5.8% 6.2% '08-'09 change: board costs exploded, rocketing upwards three times faster than median -0.07% 08-09 change: household income household income. $22,900 class of 2011 2008 2007 2009 (It still pays to go to college, though: the unemployment rate for high school graduates was 2.6 times higher than the rate for college graduates in 2009) Change in college tuition costs 439% and fees since 1982 $20,500 class of 2008 147% Change in median household income since 1982 SOURCES: There's A Way Out! INSTITUTE FOR HIGHER EDUCATION POLICY Students can find a number of ways to avoid default, but having a plan to manage debt is crucial no matter what strategy they pick. They can decide to work a part-time job during college, or begin setting money aside well in advance. They can even choose to supplement or replace Once a student makes a plan, she should stick to it. Borrowers who graduate successfully are far less likely to enter delinquency or default on their loans. 38% of graduates face these problems, compared with 59% of students who leave college without a degree. NATIONAL CENTER FOR PUBLIC POLICY AND HIGHER EDUCATION NATIONAL CENTER FOR EDUCATION STATISTICS US CENSUS BUREAU THE WALL STREET JOURNAL THE NEW YORK TIMES their loans by fundraising from friends and family. Whatever the case, a student ought to have a plan to pay off debt before she takes it on. CONGRESSIONAL QUARTERLY THE COLLEGE BOARD For full citiations, head to www.edulender.com/blog