Student Loan Debt Could be Holding GA’s Recovery Back

The Center for State and Local Finance at Georgia State University recently issued a report on trends in Georgians’ student loan debt, and the results aren’t pretty. 33% of 25-year-old Georgians now hold student loan debt, more than triple the amount of Georgians in 1999. This number has previously been about 5-6% lower than the national average, but the gap has grown smaller in the past two years while HOPE recipients and awards have declined (as the cost of attending USG schools rises dramatically).

Of the 25-year-olds with student debt, the average amount owed has also grown dramatically from $8,149 in 1999 to just over $25,000 in 2013 – right at the national average. Interestingly, four-year college graduates in Georgia hold over $3,000 less in student loan debt than the national average – which the report notes could be due to college completion rates, for-profit colleges not being included in the four-year college graduate data, and that graduates are more likely to have received the HOPE Scholarship.

Post-recession, this student loan debt appears to be holding back the Georgia market for homes and vehicles. Before the recession, more Georgians with student loan debt took out auto loans and mortgages than the national average. During the recovery, however, the proportion of Georgians with student loan debt buying houses and cars has dipped below our nation as a whole.

61 comments

  1. Max Power says:

    Full disclosure: I would personally greatly benefit from student loan forgiveness.

    That being said I strongly support student loan forgiveness :). Seriously our higher education financing system is terribly broken and there needs to be a lot of work mostly at the state level to fix it. 1) All states should make at least 4 years of higher education available for free to everyone capable of attending. 2) The feds should phase out student loans and and implement a rolling program of student loan forgiveness starting with the oldest loans and working forward. 3) the fed should make grants/scholarships available for low income students to acquire graduate/professional/medical degrees with a 1:1 public service payback.

    • TuckerDawg says:

      The fed might also consider capping how much they loan or allow student loans to be wholly or partially dischargable in bankruptcy.

      Universal loan forgiveness is probably not going to happen, though maybe partial forgiveness after a long period. There are already some options for people who work in government jobs.

  2. blakeage80 says:

    It’s held back my recovery and will continue to do so until it’s paid off. The pool of graduate degree earners is much smaller, but that debt can be much higher for someone that has shouldered the whole cost+interest.

  3. gcp says:

    There are many alternatives to student loan program: financial help from family, HOPE, veteran programs, employee tuition assistance (UPS and chic-fil-a), work part or full time while attending school, private scholarship, attend community college first two years.

    Unfortunately folks are too dependant on federal taxpayers for all aspects of life including financing college.

    • Max Power says:

      For some folks there are many alternatives, for many folks including myself there weren’t any. There was no HOPE back then, no family capable of helping, I was already working full-time just to survive, none of my employers offered an tuition assistance, and I did in fact attend Dekalb College before transferring to a four year school. Still graduated undergrad with a considerable amount of debt, add law school to that and ugh. Education is a public good and the better educated our populace the better our society. If Denmark can offer 4 years of higher education free I’m sure we can figure out a way to do it as well.

        • Max Power says:

          Just because we are not Denmark doesn’t mean they don’t have some good ideas that we might want emulate.

                  • TheEiger says:

                    Show me a funding solution first. Then we will chat. It’s not free. Nothing is free. SSI disability goes broke next year. Social Security will start paying out more than it takes in in just a few years and Medicare is also unsustainable and you want to start yet another entitlement. No.

                    • Max Power says:

                      The funding will come in the form of higher taxes. And this would be a state by state program so it really has nothing to do with the federal entitlements. As for the funding for student loan forgiveness, that’s why you phase it in over a period of time. Order a few less F-35s cancel a new carrier, make active duty retirees wait until their 65 to start drawing retirement, etc.

                    • TheEiger says:

                      “The funding will come in the form of higher taxes. And this would be a state by state program so it really has nothing to do with the federal entitlements. As for the funding for student loan forgiveness, that’s why you phase it in over a period of time. Order a few less F-35s cancel a new carrier, make active duty retirees wait until their 65 to start drawing retirement, etc.” – No

                  • gcp says:

                    Equip our kids with basic skills (k-12). Beyond that, let the kid and his family use one of methods I listed above if they so choose.

                    • TheEiger says:

                      “And if they can’t tough? You don’t think society benefits by having a better educated populace?” What you are wanting is equal outcomes. Not equal opportunity. Everyone has an opportunity to go to college (not everyone needs to go to college) if they desire. Yes, it’s harder for some, but that’s life.

                      You also have the very flawed mindset that you have to go to a four year college to be successful in life. That can’t be farther from the truth. My brother makes $80,000 a year as a pipe fitter. He does well with zero college. It’s called hard work and the desire to succeed. I have friends with BA degrees that will never make $80,000 a year in their lives.

                    • Max Power says:

                      I don’t believe that everyone is capable of or should go to a four year university, but if you are capable and have the desire it shouldn’t be money that stops you. Sure there are successful people who didn’t go to college or even high school but on average higher education is a gateway to a more successful professional career. The lifetime earnings of someone with a bachelors degree is almost double that of someone with a high school education. That should be enough reason to make it available to everyone.

                  • Noway says:

                    Max, seriously? You’re really asking why should the govt not pay for your college. How ’bout that it isn’t their job!!

                  • Noway says:

                    It’s called an 18 trillion dollar debt, Max, brought about by continuing to buy votes from those like you who think it’s the gov’t’s job to give them free stuff. College? Sure! Food Stamps? Why not! Granny’s new hip? Why, of course!; Social Security at 62 versus 65? Oh, ok! Cell phone? Absolutely! High speed internet? Gotta have it, fairness you know! National Death, not National Debt – by 1,000 cuts.

                    • Max Power says:

                      Read carefully, the feds are already paying for it. I want states to take responsibility for higher education in their state and pay for it accordingly. Nothing to do with the national debt.

                  • Noway says:

                    Oh, well, since it’s just the state you’re asking to seize the money – that’s ok! LMAO! Why don’t the people take responsibility for getting their own things, Max? Novel concept, there, Senor Marx??

                  • Noway says:

                    I’ll quote gcp from above: “We are mandated to provide k-12, nothing more. Not taxpayers responsiblity to finance anything beyond 12.” Nuff said!

                    • Max Power says:

                      That’s an idea worthy of debate. Maybe we should also consider housing for those unable to provide for themselves?

  4. androidguybill says:

    @TheEiger:

    “What you are wanting is equal outcomes. Not equal opportunity.” Your Pavlovian anti-affirmative action response does not quite fit this context.

  5. TheEiger says:

    “That should be enough reason to make it available to everyone.” College is available to anyone that truly has the desire to go to college. This comes from the first person who has ever gone to college in my entire family. It’s harder for some. I get it. It’s not impossible.

    • Max Power says:

      But once again the costs have become untenable. The current system involves shifting costs from the state, to the individual, and then to the feds where we all pay for it anyway. Why not keep and control the costs at the state level?

      Imagine if the state could build a road that would on average double the lifetime earnings of a least one third of the state. Who would oppose building such a road?

      • TheEiger says:

        I don’t think just offering “free” college is a solution. I don’t think we need to raise tax at the state level to pay for someone’s free degree in English or Poli Sci.

        Going back to your original post. I think forgiving student debt for people that decide to spend three years in some type of service to the public is a good idea and worth talking about. If you decide to become internist some if not all of your medical school loans will be forgiven. I like those ideas.

        I have a polic sci degree. It’s worthless. We do not need to be giving out worthless degrees for free. Because it’s not free. People complain about HOPE paying for rich white kids to go to school on the backs of poor black families. What you are proposing would be even worst.

        The state would reimburse colleges at a lower rate than colleges are currently receiving. This will then drive up student fees and books and housing. Just like we have seen with HOPE. Then you are coming back to the voters to ask for a tax increase to pay for something that;’s free.

        That’s why I’m a no.

        • Max Power says:

          I also have a poli sci degree, and as I used to joke what does an B.S. in Poli Sci qualify you for, not much but it makes you a hell of a contestant on Jeopardy. It’s funny because it rings true but the fact is without my poli sci degree I wouldn’t have been hired for my first white collar job in HR where I spent 15 years before deciding to go to law school.

          And just to be clear what I’m proposing is that the state mandate that all their public colleges and universities be free or tuition and fees, instead the state will properly fund them on a per pupil basis. Back in the 60s this was the case with the University of California system and as a result a lot of people went to college that wouldn’t have been able to otherwise.

          And this is just a starting point for a discussion, I’m open to compromise and persuadable. If you like the public service idea consider state governments have a lot of administrative workers why not allow students to off-set on a 1:1 basis 1 year of education for 1 year of public service at a reasonable but low wage. The state could reduce its labor costs these student workers for the most part wouldn’t be sticking around to get pension benefits, seems like everyone wins. The important part is do this at the state level and keep the feds out of it.

          • TheEiger says:

            ” instead the state will properly fund them on a per pupil basis.” Education already takes an extremely large portion of the state budget as is. Again, I don’t think we need to be raising taxes to pay for this.

            That’s the problem with a lot of liberal thinking. X costs too much. Let’s have the government pay for X.

            Health care costs too much. The feds need to step in.

            Higher education costs to much so the state just needs to pay for for it and make it free.

            Why don’t we talk about the Why college is expensive and try to fix the why instead of just throwing our hands up and say it costs too much so we should just make it “free.”

            • John Konop says:

              …….Why don’t we talk about the Why college is expensive and try to fix the why instead of just throwing our hands up and say it costs too much so we should just make it “free.”…..

              Agree…drives me crazy…..we throw more money to a product that is growing way faster than GDP…And we cannot figure out why it is out of control….We need to look at capping student loans based on degree ROI and job placement at the college….That would be the wake up call….more money….more inflation…

            • Max Power says:

              No the reason isn’t because X cost to much it is because X is something everyone should have access to. The market is very good at allocating scarce resources except when we want everyone to have access to those resources. That’s why the market doesn’t do so well at things like education and healthcare.

              • John Konop says:

                Max,

                Education and healthcare have similar issues….the system for various reasons promotes a grap bag incentives….with no real incentive to cost contain and or held to any performance standards….a great formula that drives the cost way faster than GDP….

                Healtcare is not wellness based…it is a disjointed system that incents billing by procedures….

                Education is payment based…not connected to any ROI based value of degree, certificate….

                Both systems have tons of government tax payer money thrown at it….with no real performance standards…The real question is with the above approach why would it not have massive issues with inflation…One of my mentors told me years ago….if we have a problem with behavior….generally look at how everyone is incented in the chain…If it is not the same as the our goal that is the problem….

                Education goal….students trained for job skills and or properly prepared for higher education….all ROI based…

                Healthcare access to quality care in the most efficient manner…..

                Does our system incentives match the goals?

          • Max Power says:

            I got that and I hope my post was clear that I spent 15 years in HR total not 15 years in my first job. 🙂

  6. Raleigh says:

    Maybe this has been discussed before but shouldn’t the headline be, “The cost of college could be holding GA’s Recovery Back”. After all the problem isn’t student loans but how much you now need to borrow. I believe I read a few reports that showed the rise in the cost of higher education has far outstripped other sectors in the economy.

    • Ellynn says:

      But is we lowered the price of college, then we would have to raise taxes to make up the funding, which will annoy the Noways, TheEigers, and the gcp people of the world even more. Here is their bottom line, You can go to college so long as their taxes are not used to fund any of your education. It doesn’t matter how you word it, justify it, reason it, ect… If they have to use thier money on any type of tax (local, state, fed, income, property, sale , or fee) to payf or it, they are not going to back it.

      • TheEiger says:

        I’m perfectly fine with my tax dollars going to K-12 education. That is where we need to be focusing. Not free college. Also, just because you bring the cost of college down does not mean that the rest will be subsidized by the taxpayers. Why is college expensive? That is the first question to ask. Then lets go fix that the Why instead of just paying for ever increasing college tuition with taxpayer dollars.

        • So a few ways to slice it:

          What if you were on the hook not from K-12, but from Age 5-18.

          Let’s say you got your GED at 16, and wanted to start either college early or learn a trade – would you be willing to pay for that year of school if it was not in a high school?

          Because technically, it would be similar to “move on when ready”, and would allow kids to self determine.

          • TheEiger says:

            Sure. That’s worth talking about. That is an innovative solution that would probably help. You could even take it a step further and say if you are in a joint enrollment program within your high school to get both high school and college credit it’s covered. But the idea that the state pay for everyone’s four year degree is out of the question.

            • Screw Joint Enrollment / Dual Degree.

              Look at it like equivelancy. Let’s say you pass the ACT / SAT with a good enough score to get into college… At that point – shouldn’t it be the equivelant of graduating high school?

              Let’s go ahead and get them graduated (early), and then because they have a year or so left of “eligibility” left, they can go do whatever they want. The the people would be on the hook for that last year of funding – probably through the LBOE, since that’s where the most $ would be for a student.

              Why is it that you can get a GED when youre 16, and it’s just as good as graduating high school, but you could have spent that time doing other things?

              Like an IT cert, or an apprenticeship, or some other work experience.

                • Could you help me figure out why a GED is not as awesome as “graduating high school”?

                  And could a public school, charter school, or whatever accrediting body set forth an equivelancy for a minimum score on a college entrance / other program test?

                  Like a GED, ACT/SAT, ASVAB, etc?

                  My point is simply this – if your’e ready to move on, and society values a college degree over a high school one – why are we getting in the way?

                  • TheEiger says:

                    I’m not arguing with you? What the hell are you talking about? I agree with you.

                    I simply do not believe we need to pay for everyone in the state of Georgia to go to college.

                    What you are talking about is the type of solution that we should be talking about.

                • What if you wanted to pay for daycare – could you start your tuition earlier, so you can work, then you’d only have your child’s education funded until they were 16? That flexibility should also be considered.

                  • John Konop says:

                    AP/joint enrolment are not really dual degree. In joint enrollment you get college credit for the class…..AP you take a subject test, and depending how you do you get college credit. The subject test is already created….which is better than an ACT/SAT.

                    The bigger issue was No Child Left Behind, which forced all students on a college prep or out track….Now we are allowing students to take alternative tracks beyond college prep….the issue is many of the programs were eliminated via NCLB….it is cheaper to just allow them to joint enroll many times to vo-tech schools….We need to be more flexible about requirements based on aptitude track….It should be an option for a mechanic to read Shakespeare not a requirement….I am sure you get the drift….

                    At the end of the day I have been advocating what you want for years….We should shorten the cycle based on aptitude track….Allow students choices based on aptitude…..which is what they do in the top countries in the world in education. We are one of the only countries in the world that promote pounding square pegs into round holes….and than complain about the results….

        • Ellynn says:

          Note I did not say a thing about K-12… Just you point on not funding college..

          I also see the sarcism font is not working on my keyboard again.

  7. Will Durant says:

    Ya just can’t work your way through school anymore unless Daddy makes you the Asst. V.P. of Paper Clips. Since 2001 Georgia’s investment per student has dropped by more than half in inflation adjusted dollars at the state’s higher institutes of learning. Consequently tuition and fees are up more than double in those same inflation adjusted dollars (from gpbi.org). Georgia State is taking over Perimeter removing the cost advantage of attending a community college… This is before we even get around to housing and the palatial dorms approved and built by the Regents at our major universities. Most of which now require you to pay year-round along with required meal plans. Of course the HOPE only pays tuition, and roughly 90% of that for 95% of those that qualify. It doesn’t pay for fees, books, housing, and food.

    What I tried to point out with the Governor’s campaign rhetoric touting him as the savior of the HOPE was that people needed to pay attention to why it needed to be saved in the first place. In-state higher education was vastly more affordable for the middle class in my day and many of your own even without the HOPE. The priorities have shifted and not for the good. I honestly didn’t have much of a problem with cinder block walls, toilets and showers down the hall, etc. Though I did get perturbed at a roommate who put a sock on the door too often. Where is the money going for all of the privatization we just approved?

    • zedsmith says:

      this is the right track– I enrolled at UGA in 2000. By the time I left, HOPE had gone from covering tuition and books and then some, to covering less than 3/4 of tuition. It has since gotten considerably worse. The university acquired plenty of real estate, built immaculate new dorms to be enjoyed mostly by student athletes, and a whole host of other academic buildings.

      HOPE was an awesome idea, but it just installed a price floor in the cost of college. Campus life is an arms race, and honestly, Georgia campuses are turning out an awful lot of mediocre BAs who are never going to use their degrees as intended (I’m certainly not), and this scandal doesn’t even approach the level of shame we should collectively feel for the scam for-profit schools that advertise during day time television or our APS test-fudging.

      If I could snap my fingers and eliminate our lottery and HOPE, I wouldn’t hesitate.

  8. abella30 says:

    There are four main players in the student loan industry: the student, the school, the loan provider and the govt/tax payer. Right now, it appears as though the student takes on all the upfront risk of the loan with the government acting as a reinsurer of sorts. The govt only loses if the student dies, becomes disabled or defaults. The school doesn’t take on any risk and the loan provider has become an administrator instead of an active player. I think the risk needs to be re-allocated so that all the players have some risk in the transaction.

    If the transaction is a success – the student graduates and finds gainful employment – then everyone wins. If not, everyone loses. Private banks should have the ability to loan money and make money off the loans but they should also face the risk of losing their investment. This could be accomplished by allowing people to bankrupt student loans after a sufficient length of time after graduating. ( I’m thinking ten years.). If the student files, then both the bank and the school should lose in some manner. The student loses by the ding on their credit. I also think that if they file bankruptcy and then reapply for student loans down the road for another program, then they have to reaffirm some/all of the original loan debt. If too many students from a certain school file bankruptcy and/or graduation rates aren’t high enough then the offending school loses the ability to participate in the student loan program. This would encourage schools to offer programs that will provide gainful employment and weed out schools that aren’t properly preparing students. It gives students time to establish a career and take advantage of forgiveness programs. Most importantly, it requires everyone in the system to take risks and businesses should respond to those risks with appropriate safeguards.

    If the govt wants to insure a portion of the loans so that more students have access, then I think those guarantees should only apply to more highly needed degrees and should also be capped. The cap should be based on the average salary someone with that degree earns for the first ten years in the state in which they are attending school so that the person can afford to pay it back. (However, if the govt guarantees it then I don’t think private business should be able to make money on it unless they could also lose something in the transaction.)

    Otherwise, if risk isn’t going to be appropriately allocated – ie, the system remains the same as it is now – then the government should just provide everyone with a two or four year degree so that we don’t create a loan bubble that causes economic havoc when it bursts.

    • saltycracker says:

      We posted a Forbes article a while ago where the author suggested the bank/lending institution stay on the hook for 20% of a bad loan.

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