Energy Blog

We present Student Loan Debt by State from Melanie Hanson at ElectionData.org on April 3, 2022.  We start with state maps and include delinquency and default data and how much they have been helped by the pandemic repayment moratorium, which has been extended by President Biden until January, 2023.  We then show details for the four largest population states, which together account for a third of the US population.  They also are home to at least seven future Presidential candidates.

We first note that the average debt per student in the different states is still pretty much in the same range, of $30,000 to $40,000 per student, spread across all states.

From the Federal Reserve Bank of New York Liberty Street Economics, we have the delinquency rates and how much they have been reduced by the pandemic moratorium on collections.  That will now be extended until January, 2023.

They report that of the ten states with the largest median debt balance, seven are in the Southern Census Region, and are Georgia, Maryland, Virginia, N. Carolina, S. Carolina, Alabama, and Tennessee.  The South also had the highest borrower delinquency rates in 10 of the top 12.  At the end of 2021, the highest borrower delinquency rates nearly halved. 38 million benefited from the pandemic forbearance pause.  Also, Senator Joe Manchin’s West Virginia and Senator Kirsten Sinema’s Arizona also strongly benefitted.

We now present the details of the four largest states of approximate populations:  California, 39 million; Texas, 29 million; Florida, 21 million; and New York, 19 million.

We make a table of these four States with their Total Amount Borrowed,  Number of Student Borrowers, and Percent of the State Population.  Then we add their Totals, and compare it to the US current Total of $1,750 Billion in borrowing by 43 million affected by the relief program.

In terms of the national importance of justifying student aid, we add the observations of the Association of Governing Boards of Universities and Colleges (AGB.org) in 2019.  Higher education institutions are the largest employers in ten states, and in two-thirds of America’s 100 largest cities.  Higher education employs 4 million people, or 2.5% of the US population.

In the twenty years from 1996 to 2015, there were university tech transfer of 380,000 new inventions.  Universities added $591 billion to the GDP, and supported 4.3 million jobs.

When college grads increased by 1% in a region, wages of high school grads increased by 1.6% in that region.

This is the California page of costs from educationdata.org.  Unfortunately, they are now three years old.

The University of California system has exceptional student aid in the Blue and Gold Plan, where students from families with less than an $80,000 yearly income have their University system tuition and fees completely covered. UC Admissions states that over 70% of our California undergrads get an average of $18,000 in grants and scholarships to help with costs, including UC tuition, food and housing, transportation, books and supplies.

The Federal Pell Grants for an average university cost cover about $6,000, if your family income is less than $60,000 a year.

These are an example of the current costs of a UC undergraduate, which varies by campus.

Economic Data of the Student Loan Debt Relief Program

I will present economic data from several news sources on the amounts in the Student Debt Relief Program.  The Department of Education site for this is studentaid.gov.  In this article, I will stay out of the political arguments.  As an educator though, I have to cite that college educated employees contribute many times over to more jobs and the economic benefit of their communities.  Also the training, research, and addition to their communities of post graduate education builds modern industries and advanced health care.  Currently, 44% of online job listings require a college education.  Two thirds of Americans support debt cancellation.  From the comprehensive educationdata.org site, we learn that the average college degree represents a 14% return on investment.  That is for the lowest cost schools.  Investopedia.com has the median annualized ROI as 6% for public schools, and 4% for private schools.  That, of course, get compounded over the years.  Compounding the 6% for 20 years gives 321%, the same as the S&P 500 has increased over that period.  Women with bachelors earn and average of $506,430 more over a lifetime than women without one.  Forty percent of Americans aged 25-34 have a bachelors degree or higher.

For the value of a college and beyond education, the 2021 data of the Bureau of Labor Statistics at age 25 or over has the median weekly earnings of high school Diplomas at $809 a week ($42,068 a year), a Bachelors degree at $1,334 a week ($69,368 a year), and a Professional degree at $1,924 a week ($100,048 a year).  The ratio of Bachelors income to High School income is 1.65.  The ratio of Professional to Bachelors is 1.44, and the ratio of Professional to High School is 2.38.  The yearly difference of Bachelors over High School is $27,300 a year, and of Professional over Bachelors is $30,680 a year.

I have seen two figures used for the amount of the loan repayments of $230 billion, and $300 billion.  I will use the official $1.75 trillion for the total amount of student debt.  For the two values of loan repayment on $1.75 trillion of student debt, the share is only 13.1% or 17.1%, an eighth to a sixth, hardly a complete repayment.

As far as inflationary pressure, even though some debt is cancelled, the yearly effect on the economy is only the drop in yearly debt payments on the loans, which amount to $24  billion a year.  We now have a $25 trillion a year economy.  The addition is one part in a thousand or 0.1%.  Compare this to the Trump tax cut of $1.8 trillion over 10 years, with $180 billion a year still injected into the pockets of the wealthy.  There was also the American Rescue Plan which injected $1.9 trillion in one year into small businesses loans and extended unemployment insurance during the pandemic, with total loan forgiveness.  This and other data is partly from the August 26th column by Paul Krugman.

The debt relief is bounded to people earning less than $125,000 a year, which is 95% of debtors, but 90% of the relief dollars will go to people earning less than $75,000 a year.  43 million borrowers are eligible for relief.  Roughly 20 million borrowers, or 45%, will have their debt completely cancelled.  One half of Latino borrowers will have all of their debt erased, while one quarter of Black borrowers will.

The average student loan interest rate is 5.8%.  Undergraduate students are paying 4.9% on average, and graduate students pay 6.1% on average.  The average student loan debt is $37,667.  In one year, 31.8% of students borrow money to pay for college.  The average student borrows $30,000 to attend school.

The debt relief program is covered while the deficit will also be reduced $1.7 trillion this year.

When the effect on inflation is discussed, we have to start with the fact that tuition costs have inflated almost a factor of five over the last 40 years.  Average tuition fees at public colleges over the past 30 years, even after adjusting for inflation, have increased by a factor of 2.6, from $4,160 a year to $10,740 a year.  Those for private colleges have doubled, from an average of $19,360 a year to $38,070 a year.

The debt repayment plan is already limited to 10% of one’s family’s discretionary income per year.  It is proposed to reduce that to 5% of discretionary income a year, with a limit of no debt after 20 years, or 10 years for community college debt.  Teachers or public servants need only make loan repayments for 10 years.

One in five student load debtors, or 8 million, had already defaulted on their student loans, even before the pandemic.

Pell Grant recipients had family income below $60,000 a year when they received the loans, and the majority of those families made less than $30,000 a year.  They will be allowed debt forgiveness of up to $20,000.  That constitutes 27 million borrowers.  That leaves 16 million bounded by relief of $10,000.  The 27 out of 43 is 63% with Pell grants.  Recipients of Pell grants owe on average $4,500 more than other college graduates.  Pell grants used to cover 80% of a public college education, and now only cover 32%.  President Biden will fight to double Pell grants.

42% of those who go to college pay back their loans over 5 years.

A third of borrowers have debt, but no degree.  However, they have the years and grades achieved in college for their job application forms.

The following two paragraphs quote data from Washington Post graphics.  Breakdown of Student Loans by Amount Brackets, and by amounts left to pay:  The less than $10K debt bracket covers 33% of borrowers, which in total owe only 5% of total debt; $10-20K, 20%, owing 8% of the total ; $20-40K, 21%, owing 17% of the total; $40-100K, 18%, owing 32% of the total; and Greater than $100K, 8%, owing 38% of the total.  The total cost of professional degrees now is about $100,000, and medical degrees now exceed $200,000.

 Student debt by ages:  Age 18-24, 24% have student debt; 25-34, 33%; 35-49, 23%; 50-61, 12%; and 62 and over, 4%.  For comparison, the average age of members of the House is 58.4 years, and of the Senate, 64.3 years.  The costs of their college and advanced education was relatively much cheaper when they went to school.  They may also be out of touch with those struggling to pay for a college and advanced education today.

The percent of undergraduate students of given races who have student loans are:  Black 90%; Latino 72%; White 66%; and Asian-American 51%.  The percent of loans which go to students of various races are:  Black 23%; White 17%; Asian-American 10%; Hispanic 12%; and Other 10%.  I know it doesn’t add up to 100%.  Rechecking that.

Information on the Public Service Loan Forgiveness program is on the pslf.gov website.

There are payback discounts for those who become teachers, and those who go into public or government service.  We note that compared to other college graduates, in 2020, All teachers earn 23.5% less, Women teachers earn 17.1% less, and Men teachers earn 35.2% less.  For the four most populous states:  in California, it is 17.6% less; Texas, 21.5% less; Florida, 19.6% less; and New York, 13.2% less.  A long time ago, teachers earned as much or more than other graduates.

A new poll by Emerson College on the $10,000 debt forgiveness, showed that for those with High School or Less, 69.6% thought that it was Not Enough or the Right amount, which we will call positive.  Of those with Some College 66.0% thought that was positive.  College Grads were 60.6% positive, and of those with Postgraduate School or an Advanced Degree, 58.6% were positive.  In total, 64.3% were positive.