Private Student Loan Debt Hits All-Time High, and Graduates in These States Are Particularly Tough | Smart change: personal finance
Want to avoid graduating with heavy student debt? Head west, young scholar. And choose a public college.
An annual report of the Institute for College Access and Success (TICAS) released on Tuesday shows that private student loan debt has reached an all-time high during the pandemic, and the debt weighing on the undergraduate class of 2020 varies widely by state and the type of college. The report, which includes state-by-state borrowing averages for federal and private loans, says total estimated private student debt reached $ 136 billion in March, up 47% from 2014. Private loans represent about 8% of all student debt.
TICAS found that “private debt is not distributed evenly across states and this riskier and more expensive form of debt is much more common in some parts of the country than in others.” States with a high average private debt level are concentrated in the Northeast, while states with lower average private debt are concentrated in the West.
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Here are the areas most indebted in private student loans for the 2020 class:
- Washington, DC: $ 51,738
- Delaware: $ 50,485
- Connecticut: $ 47,021
- Vermont: $ 45,305
- New Hampshire: $ 45,005
Areas least indebted in private loans:
- New Mexico: $ 13,558
- Alaska: $ 15,125
- Utah: $ 19,111
- Idaho: $ 21,544
- Nevada: $ 21,845
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These debt figures are based only on students who have incurred private debt. The share of undergraduates who have taken out private loans ranges from 3% in Utah to 27% in North Dakota. The above amounts do not include federal loans, which means that the total debt load for many graduates is even higher.
The organization also found that students at private, nonprofit colleges were more likely to graduate with private loan debt and have higher total debt than students at public colleges.
TICAS estimates for the study were based on data voluntarily provided by public and not-for-profit colleges and universities. It excludes private for-profit student loan debts, as TICAS claims that these types of institutions rarely provide such data.
The TICAS report comes as national student debt, including federal student loans and private loans, exceeds $ 1.75 trillion, according to the Federal Reserve.
Although all loans carry some risk, private student loans are riskier than public loans for several reasons. For example, private loans do not have an income-based repayment plan, interest rates are generally higher because they are not eligible for federal grants, and there are no forgiveness options. loan (apart from filing for bankruptcy).
“The student debt burden does not only depend on the amount of student debt, but also on the types of loans they have,” TICAS explains. “Private loans – those from banks and other private lenders – are one of the riskiest ways to pay for college.”
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