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Student debt continues to grow, but there's been a slowdown

Key Points
  • Student debt grew less quickly in 2017 than in previous years.
  • Certain groups are suffering more than ever, and parents are now taking on more debt.
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Student debt continues to grow, albeit more slowly than in previous years.

About 66 percent of college students graduated last year carrying debt. On average, they owed $28,650, according to an annual report on student loans by The Institute for College Access & Success.

The average debt per graduate rose just 1 percent in 2017 from the year prior. It spiked 4 percent a year on average between 1996 and 2012.

Although that deceleration is welcome news, it doesn't tell the whole story, said James Kvaal, president of TICAS.

"There are real reasons for concern about the crisis that is happening among certain groups of students," Kvaal said.

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There is currently a record high 8.9 million federal student loan borrowers in default, and another 1 million borrowers default each year, according to TICAS. Graduates from low-income families are five times as likely to default on their loans than their higher income counterparts. One in five black college graduates defaulted within 12 years of entering college, TICAS reports.

Kvaal attributes the slowdown in student-debt growth to the fact that net tuition has been growing more slowly as of late and that state spending on higher education has recently ticked up.

Student loan expert Mark Kantrowitz says students are simply hitting the federal student loan limits, and borrowing is shifting to parents. He calculates that parent student loan debt rose 20 percent between 2011 and 2016, from $27,000 to $33,000.

Average debt at graduation varies widely per state.

TICAS High low debt state 180919

Many students are still taking out private loans, even though they come with fewer protections than federal loans. Around 15 percent of last year's student debt was non-federal. "Some students are turning to the higher-cost private loans," Kvaal said, even when they might not have exhausted their federal aid options.

The interest rate on private, undergraduate loans can be as high as 14 percent, compared with around 5 percent for federal undergraduate loans, according to TICAS.

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