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The Project on Student Debt reports that the average student debt for graduates of
Illinois public universities in 2005 was $17,089 and for graduates of the private
four-year institutions it was $18,431.12 Those averages do not seem like
extraordinarily high debt loads, but remember, they are just averages. On a national
basis, debt levels for graduating seniors increased 109% over the past ten years.
Worst of all, there is evidence that the heaviest borrowers are the students of
modest means. More than 88% of Pell grant recipients (students of average means)
also had student debt upon graduation, compared to 52% of those graduates
without Pell grants. Twenty-five percent of the Pell grant recipients had debt of at
least of $27,625 and 10% had debt of at least $38,000!
DEBT EFFECTS
Carrying such heavy debt loads has many effects on the lives of college graduates
and on the society in which they will live. Many graduates with debt report they
must put off life decisions due to the debt: 44% - buying a house, 28% - having
children, 27% - medical and dental procedures, and 18% - getting married. Most
alarming is the fact that among those graduates with debt, 40% have accumulated
at least $50,000 of additional household debt, as opposed to only 15% of the
graduates without debt.13
Debt may also impact decisions about careers. A report issued by the U.S. Public
Interest Research Group estimates that 39% of college graduates have
unmanageable student debt loads at the average starting salary of $32,101.14
Obviously, graduates with debt will migrate toward positions paying higher
salaries in order to be able to pay back their loans. Another study by the State
PIRGs’ Higher Education Project specifically looked at the effect of student debt
on the teaching profession and social work (two traditionally low paying public
service sector jobs). Nationally, among public university graduates, 23% and 37%
would have unmanageable student debt if they entered the teaching and social
work fields, respectively. For private institution graduates, the percentages jump to
12 The Project on Student Debt, Student Debt and the Class of 2005: Average Debt by State, Sector and School (Aug. 2005),
available at http://projectonstudentdebt.org/files/pub//State_by_State_report_FINAL.pdf, last visited on October 25, 2006.
These figures were based on amounts reported by the institutions to Thompson Peterson Undergraduate Financial Aid
and Undergraduate Databases. The amounts only include loans processed through the institution. As a result, amounts
financed independently of the institution, amounts borrowed before transferring into the reporting school and credit card
debt used to finance the student’s education costs are not included.
13 Alliance Bernstein, Investments, College Debt Crunch: The Biggest Threat to Young American’s Financial Well Being?, available
at http://www.alliancebernstein.com/CmsObjectCDC/PDF/CDC_Brochure_BiggestThreat.pdf, last visited October 25,
2006.
14 Tracey King & Ellynne Bannon, The Burden of Borrowing: A Report on the Rising Rates of Student Loan Debt (March 2002),
available at http://uspirg.org/uspirg.asp?id2=5916&id3=USPIRG&, last visited October 31, 2006.
