A college degree has the power to lift families out of poverty and open the doors to unlimited opportunities. Families and students understand this and know that college is worth it. It is why they choose to make the financial investment in higher education, but that investment should not become an unmanageable burden.
The rise in student loan borrowing nationally and in California is worrisome. Studies suggest rising student loan debt is limiting graduates' ability to participate fully in the economy. So, while student loans help to fill in financial gaps and make a college education possible for millions of students who otherwise would not be able to go to colleges in California, they must remain manageable.
Our newest report examines the magnitude of federal student loan debt taken on by undergraduate students enrolled at colleges in California, explores the possible causes of the rise in student loan borrowers, explores current federal student loan options and policies, and makes key recommendations.
The report finds:
- California students may be leaving money on the table: In 2013, only 61% of CA high school graduates completed the FAFSA and only 58% applied for Cal Grants.
- Student loan debt is rising: Although California is considered a "low-debt" state, students here who earned a four-year degree in 2012 graduated with an average of $20,269 in student loan debt up from $16,071 just eight years ago.
- More students are borrowing: In 2003-04, 51% of all four-year college and university undegraduates in California were loan borrowers. In 2012-13, 74% of all four-year undergraduates were loan borrowers.
- Debt may becoming unmanageable: In California, 11.5% of student borrowers in 2012 were 90 or more days delinquent in their loan repayments.
Not all debt is bad, especially if it provides access to college for a student who otherwise would be unable to attend. Borrowing makes sense as long as students can earn a degree with value that allows them to manage and pay back their debt after graduation. The challenge we face today is that too many students are leaving grant aid on the table, turning to private loans before maximizing federal loans, and not taking advantage of flexible repayment options.
The report provides concrete ways that students and families, high schools, colleges and universities, and state and federal policy makers can work immediately to keep college affordable.
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