College students are graduating with higher debt levels at a time when the economy offers fewer jobs for them to choose from, according to a new report.
Students who graduated in 2009 carried an average of $24,000 in student loan debt, a 6 percent increase from the previous year, while unemployment for recent college grads climbed from 5.8 percent in 2008 to 8.7 percent in 2009.
The 6 percent increase in average debt is similar to annual increases over the past four years, but the current economic climate may make that debt more of a burden to job-seeking college grads. The unemployment rate for college graduates aged 20 to 24 was the highest on record in 2009, the report said.
So, which colleges in California produce students with the highest debt? First, a few caveats: Not all colleges and universities are included in the report because institutions voluntarily provide the figures as part of a survey. Also, financial aid officials don't always have full information about the private loans their students may have taken out. But given those limitations, the report does list a number of "high debt" colleges.
The only California institution on the list is Woodbury University, a private, nonprofit institution based in Burbank that enrolls about 1,500 undergraduate and graduate students. The average debt for graduates in 2009 was $47,059, with 91 percent of graduates in debt. Tuition and fees at the school add up to $26,978 per year.
Why the high debt?
Don St. Clair, Woodbury University's vice president for enrollment management, gave two main reasons. About 42 percent of undergraduate students at Woodbury are pursuing bachelor's degrees in architecture, a five-year program. That means more students are enrolled for five years at Woodbury than at other universities included in the survey, causing a higher cost of attendance and higher debt levels, St. Clair said.
The California Architects Board requires a total of five years of educational credit plus three additional years of work experience before people are eligible to take the licensure exam.
Low-income students make up 45 percent of the population at Woodbury, which also contributes to students' financial need and, ultimately, their indebtedness. The school offers about $8 million annually in scholarships to supplement federal and state grants, but there's still a gap between what the school costs and what most students can afford on their own, St. Clair said.
"We would prefer that our students had less debt," St. Clair said. "We would prefer that we had an endowment that allowed us to give our students more support. We also recognize that we're in an era of economic reality and economic limitations. For me the question is, are we delivering value to our students? Are they getting launched?"
To answer that question, St. Clair points to Woodbury's low default rates.
Just 1.2 percent of Woodbury borrowers defaulted on their federal loans within two years of leaving the college or university in 2008, according to the most recent data available. That's below the national default rate of 3.7 to 4 percent for private institutions.
"I think it is a testament to (Woodbury's) effectiveness that our default rates are pretty low. Our students leave here with a set of skills. They leave here with an education that allows them to make their way economically," St. Clair said.
Lauren Asher, president of the Institute for College Access and Success, said that average debt figures give prospective college students one more piece of information to use when they're choosing between different schools. The figures also help give an idea of what attending a college will actually cost – information that is hard to come by until students apply and get their financial aid packages.
"Consumers carry a very heavy burden in trying to figure out what a college might cost them and how they might pay for it," Asher said. "What we really need is better data and more comparable information to help them make good decisions."
Data on average debt at colleges and universities is inconsistent and incomplete. About 1,000 public and private nonprofit four-year colleges voluntarily reported their graduates' average debt levels to Peterson's, a producer of college guides. The Project on Student Debt licensed and used the data from Peterson’s to put out this report.
But the federal government does not require colleges to report graduates' cumulative debt – the combination of federal and private loans that students must repay. Most for-profit colleges don't offer up the information about their graduates' average debt either.
Part of the report's purpose is to push for more consistent and accurate information about student debt.
"It would help inform policies and help colleges better target their practices if you had that consistent annual apples-to-apples information," Asher said. "This is best we can do to fill that gap."