Study ranks Louisiana as 15th worst for student loan burden
23rd June 2020 · 0 Comments
By Fritz Esker
Contributing Writer
According to a new study from the website Student Loan Hero, Louisiana is the 15th worst state in the country for student loan debt burdens.
The report stated that 26 percent of Louisiana residents carry student loan debt. The median student loan debt in the state is $20,270. The delinquency rate is 14.7 percent. The delinquency rate is particularly noteworthy as it exceeded every state ranked as worse overall than Louisiana except for two (Mississippi and Kentucky). On the other hand, Louisiana’s median debt was lower than many states, ranked as better overall.
National Center for Education Statistics data from 2018 showed that an estimated 77.7 percent of Black students borrowed federal student loans to pay for college, compared to 60 percent for all students and 57.5 percent for white students. Black students were more likely to take out loans at all types of schools – public and private, two-year and four-year, nonprofit and for-profit. The disparity was greatest at four-year colleges, where Black students borrowed at a rate of 86.8 percent (white students borrowed at 59.9 percent).
The study also found that 50 percent of Black students who started college in the 2003-04 school year defaulted on their loans by 2016. Black students’ default balance grew by 113 percent in that period. Default rates for Hispanic (36.1 percent) and white (21.5 percent) students were lower.
“Student loan debt exacerbates existing structural inequalities,” said Lisa Stifler, director of state policy for the Center for Responsible Lending.
Andrew Pentis, a senior writer for Student Loan Hero, said the racial wealth gap causes students of color to borrow larger amounts of money to attend college. Students of color often come from poorer families, so they are less likely to have family assistance with college tuition.
Davante Lewis, director of public affairs and outreach for the Louisiana Budget Project, said the state needs to invest more in need-based financial aid programs. TOPS receives 91 percent of the $331 million Louisiana spends each year on financial aid. But Lewis noted that 43 percent of TOPS recipients come from a family with a household income of over $100,000. The median household income in Louisiana is just over $47,000. So, many families in serious financial need are left out of TOPS. Go Grants, which are need-based grants of $300-3,000 a year, receive only $29 million in annual funding. This makes loans a necessity for many low-income people looking to obtain a college degree.
The issue is compounded by tuition increases. The Center on Budget and Policy Priorities released a report in 2019 that found that tuition at four-year public universities in Louisiana has increased by 106.9 percent ($4,810 per student) since 2008. These increases are the second-highest in the nation in that period. However, state funding per student has fallen by 38 percent ($4,454 per student) over the same time span.
Lewis also stated that the student loan crisis does not just harm the young. He said six percent of the student loan borrowers in Louisiana are over the age of 60. These people are often parents or grandparents co-signing a loan for a child or grandchild who is not eligible for a loan. The problem is also not limited to cities. 17.3 percent of Louisiana’s student loan borrowers live in rural areas.
Stifler said that for-profit colleges, places like ITT Tech, University of Phoenix, Corinthian College and others, also add to the student loan problem in many regions. The Center for Responsible Lending released a 2019 report that found that for-profit college students were less likely to graduate than counterparts at public or private nonprofit universities. The programs tend to cost more than comparable programs at nonprofit colleges. As of 2019, 13,639 of Louisiana’s 191,125 undergrad students were enrolled at for-profit schools.
The Student Loan Hero report said that if students must borrow, they should choose federal loans instead of private loans. Federal loans offer more expansive repayment options. After graduation, students in debt should consider moving to areas with a lower cost of living. Some places even offer student loan payment assistance programs.
Pentis said families and students should consider the value of attending certain colleges. If it’s a top private school, will the degree truly be worth taking out tens of thousands of dollars in loans (if not more)? He recommended that students look at state schools or attending community college for two years as more cost-effective options. Living at home with family and commuting to a university instead of traveling out of state and staying in a dorm is another way to decrease costs.
“You should exhaust every option you can before borrowing,” Pentis said. “Student loans should be a last resort.”
This article originally published in the June 22, 2020 print edition of The Louisiana Weekly newspaper.
