Average student loan debt increased by 5 percent nationally in 2009-10 — making it more than $9,000 higher than the average debt of a graduating UC Berkeley student.
The average student loan debt of graduating college seniors rose to $25,250, according to the Project on Student Debt report conducted by the Institute for College Access and Success. At UC Berkeley, the average loan debt of graduating seniors was $16,056 in 2009-10.
“Across the nation and especially in California, there has been a steady increase in tuition,” said Julian Betts, a Bren Fellow at the Public Policy Institute of California and a professor of economics at UC San Diego. “It’s almost inevitable that debt will increase as well.”
California has 127 Bachelor’s degree-granting institutions — second only to New York — but has the fifth lowest average student debt in the country.
“California is relatively low, as are many states in the west with large public schools,” said Matthew Reed, program director for the Institute for College Access and Success and author of the report. “The availability of need-based grants in California helps, especially the Cal Grant program.”
Nationally, two-thirds of graduating seniors had student loan debt in 2010. However, at UC Berkeley, the number was significantly lower, at 41 percent.
Though UC Berkeley’s average student loan debt was lower than the national average, the campus has a prevalence of students graduating with nonfederal debt.
Ten percent of graduating UC Berkeley seniors in 2010 were forced to take out loans from banks or private lenders to pay for tuition and living expenses, which compares with the national average of 33 percent of students graduating with nonfederal loans. The average private loan nationally amounted to $12,550, according to the report.
The national average is inflated because it includes statistics from for-profit colleges, whose students are much more likely to seek private loans to finance their education, according to the report.
“Student debt continues to rise, but there is a lot of variation,” Reed said.
The report describes nonfederal loans as no more secure a form of financial aid than a credit card. These loans are characterized by uncapped variable interest rates that are highest for those in the most financially unstable positions.
The graduating class of 2010 faced a 9.1 percent unemployment rate — the worst employment prospects in recent history — which is still less than half the unemployment rate of young people with only high school diplomas, according to the report.
Although UC Berkeley’s in-state tuition and fees — which were $8,353 in 2009-10 — are the lowest of all the UC campuses with the exception of UCLA, the high cost of living in the Bay Area makes the total cost for students much higher. According to estimates from the report, the total cost of attending UC Berkeley in 2009-10 was $28,312.
“I think I speak for all professors in the UC system when I say we are greatly concerned about access,” Betts said.
According to the report, on campuses that have reported the introduction of counseling programs, there was a marked transition from riskier private loans to students fully utilizing the safer federal loans completely before turning to private loans.
“I think they should do more loan counseling because it’s easy to not realize you’re taking out more than you need,” said Anna Cross, a UC Berkeley senior who is graduating with federal student loans and is doing work-study to help offset the costs. “I’ve been watching my debt increase. It’s not a great feeling knowing you’re graduating totally in debt.”