New Report Draws Attention to Student Loan Debt

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August 10, 2011

Using IPEDS graduation rate data coupled with student loan data, Education Sector’s new report, “Debt to Degree: A New Way of Measuring College Success,” creates a model to compare institutions of all sectors and types on the dollars of student loan debt generated per credential. This ratio is suggested to be a more comprehensive indicator than others because it relates increased student borrowing to rising tuition, with a small fraction of students making it to graduation.

Variation in student loan debt per degree within sectors can be explained by outside factors such as state policy or veterans’ benefits. For example, two institutions with similar tuition and graduation rates can have very different borrowing per degree ratios depending on the state policies toward merit based grant aid and/or amount of state subsidies to higher education, both of which influence the amount of student borrowing. Also, analysis of some institutions with a high ratio of dollars per degree reveal that a recent boom in enrollment impacts the ratio with large dollar amounts borrowed but few degrees awarded due to the fact that there has not been enough time for degree-seeking students to have graduated. Education Sector acknowledges the limitations of their ratio in that it includes both students who graduated that did not take loans, and those that took loans but did not graduate. However flawed the methodology, Education Sector suggests that poor graduation rates, skyrocketing tuition, and corresponding student debt should be investigated, and that their ratio is a way to quantify this relationship and add to the conversation about these issues.

Report can be downloaded from Education Sector site.