Washington (Reuters) - College students who graduated in the spring of 2010 launched into the worst job market in recent history with bigger student loan debts than ever before, an advocacy organization reported.
The Project on Student Debt reported Thursday that those students who had loans owed an average of $25,250, up 5 percent from the previous year. The unemployment rate for new college graduates was 9.1 percent.
The new data adds weight to the argument that education debt is a growing problem for new and recent graduates, with some experts estimating that total education debt is now pushing $1 trillion. President Barack Obama announced some measures designed to make those debts easier to repay, but his plan only applies to federal loans, and not those issued by private banks.
That’s a distinction the Project on Student Debt likes to make. “How you borrow, not just how much you borrow, really matters,” said Lauren Asher, president of The Institute for College Access & Success, the group that runs the student debt project. She pointed out that federal loans offer more consumer protections and rate caps than private loans do.
The volume of private loans have fallen considerably since the 2007-2008 school year, when they reached 22.8 billion, according to the College Board, a nonprofit research and testing organization. The total volume of private loans for the 2010-2011 school year was roughly $6 billion. “That’s likely to have bottomed out,” said Asher, who sees growing activity in private loans now.
During the same period, federal loans have more than made up for that, growing from $71 billion in the 2007-2008 school year to $104 billion in the current school year. Consumer advocates like Asher believe that federal loans are preferable.
The new report does show that there is a great deal of disparity in the debt levels of graduates depending upon what school they attended and where they lived. Average debt levels by college for the class of 2010 ranged from $950 to $55,250. The state with the highest average debt was New Hampshire, with $31,048. Lowest debt loads were reported in Utah, with $15,509.
Editing by Beth Gladstone