NOW THERE'S AN '08 PRIMARY ISSUE. It's a rare thing when a national issue manifests itself in its most extreme form in presidential primary states, but that appears to be exactly what's happened with America's growing student debt problem, according to a new report (PDF) by The Project on Student Debt. Students who attended colleges in Iowa and New Hampshire graduated in 2005 with the highest debt burdens in America, an average of $22,727 and $22,793 respectively. That made New Hampshire's recent college grads the most indebted in America, with those from Iowa following a close second.
How can this be, given that both states lack clusters of pricey, brand-name private institutions? The answer is somewhat counter-intuitive: Student debt is not a function of tuition costs, but of the economic background of the students combined with the costs of living in an area and the amount of aid provided by states and their university systems. Thus, lower-income students who attend low-tuition public colleges can easily graduate with higher levels of debt than those who attend high-tuition private ones. The private schools often have a large enough endowment to significantly subsidize attendance for lower-income students, and they also attract fewer lower- and middle-income students who need outside aid to begin with. It helps, too, that many of the top schools are clustered in states, such as Massachusetts, that have favorable aid policies for the middle-income tier.
That's why, in a place like Iowa, it's the public-college students who leave school with the greatest debt burden, not the private school ones. Still, between going into debt to attend a public college and going into debt to attend a private one, the public ones can be significantly cheaper. The top five worst states -- from a student debt perspective -- in which to attend private colleges are: Arizona, Alaska, New Hampshire, Idaho, and Montana. The average graduate of a private college in Arizona left school with more than twice the debt of the average graduate of Harvard University ($32,504 vs. less than $15,000) and nearly $10,000 more in debt than the maxed-out Iowa graduates. The most indebted public college students studied in: Iowa, North Dakota, New Hampshire, Pennsylvania, and South Dakota.
Candidates, get your policy papers ready.
--Garance Franke-Ruta
