The Average Loan Debt of College Graduates

Financing a college education can be challenging for many students. But in 2009, it was a little harder that in previous years, according to the Project on Student Debt. Among students who borrowed money for college, the average debt load was $24,000 for students who graduated in 2009. That is a 6 percent increase from previous years.

Geography

College is easy for some. The hard part is paying it back.

The study by the Project on Student Debt (PSD) shows a clear geographical pattern in student borrowing. Students from northeastern states tended to have higher debt loads than the national average. Students from western states had burdens lower than the national average. The PSD notes that northeastern states tend to have more private nonprofit universities, with higher tuitions. Students in western states are more likely to attend state-financed universities, which offer lower tuition. State-funded institutions in the Northeast tended to be more expensive than their counterparts in the South and West.

Significance

Many will send hundreds of resumes.

Graduates in 2009 faced significant debt while also facing diminished job prospects. According to PSD, "unemployment for recent college graduates climbed from 5.8% in 2008 to 8.7% in 2009 -- the highest annual rate on record for college graduates aged 20 to 24."

Bankruptcy

Student loans are only discharged for persons who cannot work.

An estimated one-fifth of persons declaring bankruptcy have student loans. They often find out the hard way that bankruptcy, unlike other debts, does not discharge student loans. The federal government, which guarantees many student loans, is on the hook when students fail to repay, and it has written several regulations to limit its exposure. According to federal student loan servicer SallieMae, "several laws were passed in the 1990s to protect taxpayers from the high number of student loans in default or included in a bankruptcy." Even private, nonfederal student loans are difficult to discharge in bankruptcy.

Considerations

You cannoot discharge the debt, but flexible payment options are available, under U.S. laws.

Federal student loans do offer significant advantages over private loans. With federal loans, graduates can opt not to pay the loan for certain periods of time, like when they are unemployed. This is usually not a feature of private loans. Similarly, federal loans limit a graduate's payment to a certain percentage of his income. Lauren Asher, president of the Institute for College Access & Success, told the New York Times in 2010 '"It's important to remember that the experts all agree that if you're going to borrow, you should take out federal loans first, because federal student loans come with far more repayment options and borrower protections than other types of loans."'

Misconceptions

For-profit colleges often have high tuition and low graduation rates.

Private, for-profit colleges are not included in PSD's report. There are 438 of them in the United States. Only seven responded to questionnaires. The schools have been criticized for making false promises, charging high rates of tuition and having low graduation rates. A Government Accountability Office report in 2010 found that "representatives from 13 colleges provided inaccurate or incomplete information about graduation rates, guaranteed applicants jobs upon graduation or exaggerated likely earnings." Such programs included a college offering a cosmetology certificate for more than $11,000 and a Texas school offering a degree in construction management for more than $65,000, according to USA Today.