RELEASE: New CAP Analysis Details How State Disinvestment in Higher Education Has Coincided With an Explosion of Loan Debt for America’s Public College Students

Since the Great Recession, annual borrowing has increased by a median of nearly $1,300 per public college student, new CAP state-by-state analysis reveals

News Release from Center for American Progress December 3, 2014

Washington, D.C. — State disinvestment in public institutions of higher education has coincided with an explosion of higher-education loan debt for America’s students, a new CAP analysis shows, with estimated annual borrowing increasing by $17 billion in the five years since the beginning of the Great Recession. Annual borrowing per student increased by a median of $1,285 during that same time span, as the nation’s postsecondary education system grows increasingly reliant on student-loan debt.

“Public colleges are designed to ensure that the promise of higher education remains within reach for all of America’s students. But as states continue to pinch pennies at the expense of public colleges, these schools must raise tuition, and students must rely more and more on loans,” said Elizabeth Baylor, Associate Director of Postsecondary Education at CAP and the author of the report. “It’s long past time to renew the state-federal partnership that has historically ensured that high-quality higher-education programs remain affordable for American families, as CAP’s Public College Quality Compact would do.”

CAP’s brief examines the increased reliance on loans by students attending public institutions and presents state-by-state data on the spike in federal student-loan borrowing since the onset Great Recession. In Hawaii and Utah, for instance, total borrowing by students at public institutions spiked by more than 100 percent since the start of the Great Recession; borrowing grew by more than 80 percent in some states, including Arizona, Florida, Georgia, Massachusetts, and Oregon.

Recently, CAP unveiled new research on the great retreat of state support for public higher education, finding that the reduction of state funding coincided with an increased reliance on tuition revenue; low- and middle-income families in states with the highest disinvestment pay the highest net price relative to students in the same income groups in other states; and the cuts disproportionately affected two-year community colleges. CAP also launched a new state-by-state interactive map that measures the direct state investment in and enrollment at public universities and community colleges since the Great Recession.

CAP’s proposal to revitalize the investment in public colleges and universities is called the Public College Quality Compact, as first introduced by CAP in a report earlier this year. The Public College Quality Compact would create a direct tie between federal and state investments and encourages states to reinvest in public institutions of higher education. To be eligible, states would need to agree to implement reforms and innovations that increase students’ value of public colleges, universities, and training centers. The compact would require states to:

• Create reliable funding by building new funding streams. These streams would need to provide at least as much as the maximum Pell Grant per student in indirect and direct support to public colleges and universities to ensure that students and prospective students can prepare for and enroll in postsecondary education with certainty.

• Make college affordable by guaranteeing that low-income students who pursue an associate’s or bachelor’s degree will receive grant aid from the compact to cover their enrollment at public institutions.

• Improve performance by setting outcome goals for institutions, such as increased graduation rates, and by implementing proven, successful strategies that improve student performance at the institutional level.

• Remove barriers and state and institutional policies that stand in the way of college completion by standardizing transfer-credit and admissions requirements and by raising K-12 learning standards to align with readiness for postsecondary entry-level courses.

Click here to read “State Disinvestment in Higher Education Has Led to an Explosion of Student-Loan Debt” by Elizabeth Baylor.