College debt increases across the country raise concerns
COLUMBIA - According to the National Center for Education Statistics, about 21 million people attended college in 2014.
For those 21 million people, many have student-loan debt on their minds.
"Well I am kind of worried I won't be able to pay it off," Stephens College Student Nicole Ihler said.
According to a research bureau, Experian, student loan debt reached $1.2 trillion this year and has increased by 84 percent since the recession. In addition, the same research found 40 million consumers have at least one student loan with an average amount over $29,000.
For prospective college students, this poses an issue.
"No matter how small it is, there is always that cloud looming over you," Wade Pritchard, a student enrolled at MU said.
Pritchard's mother, Dawn Pritchard, said, "No matter what, you save, but the cost to come to college is so expensive now that you can't possibly come up with enough money."
At public colleges in 2012, average debt was $25,550, which is 25 percent larger than the amount in 2008. In Missouri, the average is slightly less at an average of $24,957, which ranks 33rd in the country. According to the Institute for College Access and Success, the average proportion of MU graduates with debt in 2013 was 55 percent. The average for Columbia College was higher at 64 percent while Stephens College was at 84 percent.
Dawn Pritchard said she paid to put herself through college. However, she said high tuition costs make it difficult to pay for students to pay for college without some sort of aid.
All 50 states have seen an increase in average tuition rates for public four-year institutions over the past five years. Colleges in Missouri have combined to average a five percent increase in tuition. Only two other states had public, four-year tuition rates increase by less than five percent over that span. Missouri also has seen the lowest increase compared to neighboring states.
However, Missouri's higher education funding per student ranks 44th in the country and is 42 percent below the national average. It is also last compared to its eight neighboring states. In 2007, the Missouri legislature passed the Higher Education Student Funding Act. This act limited the governing board of each Missouri public college or university to only raise tuition by the rate of inflation.
MU Economics Professor Aaron Hedlund said this poses issues for schools because they have to search for new ways to charge students and raise revenue.
"Even though costs are rising rapidly still, revenues aren't because of new restrictions, Hedlund said. "I think what Missouri and other states need to think about is what is our commitment to public education and then, broadly speaking, how can we bring down costs?"
For Wade Pritchard and the millions who will attend colleges across the country this fall, Hedlund said it is still a good a good choice for many Americans despite state-funding restrictions and rising tuition.
"College is still a good investment," MU Economics Professor Aaron Hedlund said. "Despite the higher debt and tuition continuing to rise, when you look over the long haul, the labor-market return for getting a college degree vastly overcompensates the debt."
Hedlund said there could be a trend to particular fields as students pay more attention to their expected salaries as opposed to other factors.
"It's going to affect career choice," Hedlund said. "If you have a lot of debt, it is going to skew that choice toward always going to that safe job."
Hedlund and another economist, Eric Parsons, said students may have to consider how long they are in school more than in the past due to these costs.
Columbia College student Shelby Blakley said, "I'm looking into grad schools too, so I'm going to have to figure out how to pay off student debt for a lot longer than most students."
Parsons said the increasing amount of student loan debt is a concern, but these numbers can be deceiving because more students are attending college than in the past.
"I think it is really hard to say," Parsons said. "The statistics show a sharp increase in student loans, but the increase in student loans per person is not as steep."
However, Parsons said future increases to student loan debt could pose an overall economic issue similar to the housing bubble.
"If loans are going out to people who can't repay them, then things could, potentially, crash," Parsons said.
To combat this issue, Parsons said the federal government needs to do a better job of providing information to people about student loan debt, the costs of tuition and projected salary information for various job fields.