April 18, 2018
Christine Stoll is Executive Director of IDeal—Idaho’s 529 College Savings Program.
Recently, the Brookings Institute released a study on student loan debt that revealed some troubling trends. In Idaho, it’s crucial that we understand what mounting bad news around student loan debt means for the college-going culture we’re trying to foster and look for ways to keep our momentum from stalling.
The Brookings study showed that high-dollar borrowers are repaying their loans more slowly than in the past, accumulating interest without chipping away at the principal balance. Small-balance borrowers are in trouble too: They account for a majority of loans in default.
An important question for us all to ponder is, “How likely is it that people who struggle to pay back their student loans will encourage their own children down the path to college?” According to Pew Research Center, only half of American college graduates aged 25-39 with student debt believe the benefits of higher education outweigh the costs.
Of course, studies by organizations like the New York Fed and Georgetown University show that higher education remains an excellent investment — college graduates earn far more over a lifetime than high school grads — but perceptions and personal experience matter.
Currently, Idaho ranks fairly low — 30th of 51 — in student loan default rates, which is good news. Idaho’s schools are relatively affordable and offer a high-value education. Still, approximately 198,000 Idahoans hold student loan debt. The Institute for College Access and Success estimates that Idaho’s four-year college graduates leave school with an average of $27,639 in loans.
Widespread reliance on borrowing cannot become the status quo if we wish to sustain the work being done across our state to improve college-going rates. Idaho’s work to fund more scholarships is a meaningful and necessary first step. Frank discussions about the price tag of higher education should take place, too. Long term, however, families need a financial tool over which they have more direct control.