Students face dangerous levels of debt

In the last eight years, the debt load of many college graduates entering the job market has grown from burdensome to unmanageable, says the Public Interest Research Group. In 1992-93, less than half (42 percent) of students at four-year institutions took out federal student loans to pay for college, and their average debt burden was just over $9,000 upon graduating. In 1999-2000, the percentage of students borrowing had increased by more than half--to 64 percent, and their average debt burden had nearly doubled--to $17,000.

Surprisingly, the debts assumed by students enrolled at public institutions are almost as high as those carried by private college graduates, according to the PIRG report, "The Burden of Borrowing." For a public university student, the average loan debt was $16,243, as compared to the $17,613 average for the student at a four-year private institution.

Although paying for a college degree is an unquestionably good investment over time (see chart, right), the monthly repayment obligations for many student borrowers leave them dangerously overextended as they launch their working lives. The student loan industry recommends that loan payments should not exceed 8 percent of monthly income before taxes. Four out of 10 subsidized loan borrowers are over that threshold, says the report, noting that the source of the data, the 1999-2000 National Postsecondary Student Aid Study, does not factor in other loans and credit card debts.

Further, loan obligations play out very differently for people of different ethnic and socioeconomic groups, says the report. For example, in 1999-2000:

• 71 percent of all dependent student borrowers from families earning less than $20,000 graduated with debt, compared with 44 percent of the dependent borrowers of families with incomes over $100,000.
• 84 percent of all African-American students graduated with debt and borrowed $2,000 more on average than the typical borrower; 55 percent had unmanageable payments--more than 8 percent of their monthly income.
• 58 percent of Hispanics carried unmanageable debt burdens.

PIRG traces the increases in student debt to changing student aid policy combined with soaring tuitions. Although Congress had tried to adjust Pell grant awards to address years of sliding support, the maximum award today covers only 39 percent of average tuition costs at a public university, compared with 84 percent coverage in 1976.

The report makes policy recommendations to keep loan debts manageable. It advocates increases in grant aid funding, lowered borrowing costs, continued flexible repayment options and continued loan limits.

The PIRG report can be downloaded at www.pirg.org/highered/burdenofborrowing.html

College Board will revamp the SAT

Changes are afoot with the nation's premier college admissions test. The College Board notified its staff in March to take steps to revise the SAT I. In doing so, the testing company is bowing to criticisms that the exam reflects cultural and gender bias and that it doesn't provide a sufficiently accurate picture of students' academic capabilities, given the weight test scores receive in the admissions process.

The areas of the test most likely to change, says the College Board, are the analogies section, the math portion and the addition of a new writing requirement.

The analogies test puts recent immigrants--or students who are first-generation English speakers--at a disadvantage, critics have noted, because identifying analogous words is more subtle than understanding vocabulary words. The math portion of the test is not rigorous enough, many say, because it does not even cover algebra II. Finally, many college professionals have complained that because the SAT I does not have an essay question, many students enter college with inadequate writing skills.

The final criticism, pounded home by groups such as FairTest, is that white males do better on the SAT I than any other group. Getting at a possible cultural bias in the test is a challenge the College Board had been grappling with--and denying--for years.

The changes, many say, are long overdue. Despite years of questions and criticism, it was the actions of one university system that moved the College Board to respond. Last year, University of California president Richard C. Atkinson called on the 175,000-student university to drop the SAT requirement for admissions applicants. The university began working with the College Board and the other major admissions test provider, ACT Inc., to devise its own test. Then, this spring, a UC faculty committee followed the president's lead by recommending that the university start using a different test in 2006. Not long after, the College Board trustees snapped to attention and told staff to identify ways the SAT I should be revised.

"We'll continue to work with California," College Board president Gaston Caperton told the Wall Street Journal, "but if this new test makes sense to them, maybe they won't need another test."

As California goes, so goes the nation?