A New Way of Measuring College Success

Update:  Education Sector has just added all of the data used to determine the debt-to-degree ratio for almost 5,000 schools and programs. Click on the link before and find the link for the data chart on the right side of the page under “Additional Materials.”

Education Sector, a nonprofit education think tank, has devised a new way of encapsulating the growing debt problem facing U.S. college students. Using recently released National Center for Education Statistics figures on the total amount of money borrowed each year by students at each of the nation’s postsecondary schools, researchers divided that amount by the number of credentials the schools awarded each year.

The result is what researchers are calling the debt to credential ratio.  Not surprisingly, the amount of money borrowed per credential awarded is highest in the for-profit sector, even though the credentials these schools generally award take only two years of schooling to attain.  The report, Debt to Degree: A New Way of Measuring College Success, notes that some of the highest ratios are at relatively young schools whose results may be skewed because there hasn’t been time for members of their rapidly increasing student bodies to have completed their coursework.

Bridgepoint Education and Grand Canyon University both have debt ratios of more than $100,000 – Bridgepoint’s is $140,000 – even though both awarded primarily two-year credentials.

Among public colleges, the researchers found that the debt-to-credential ratios tended to be almost $1,800 lower at so-called state flagship universities than at other state-supported four-year schools, primarily because the flagship schools are more selective in accepting students, who then tend to be more likely to complete their degrees.

For private colleges, the more elite the university, the lower the debt ratio is –largely because these colleges have large endowments that can underwrite discounts for lower-income students.  For example, the debt ratio at Princeton University, with an endowment of $14.4 billion, is just $2,385, compared with the debt ratio at Columbia University of about $16,000.

“Borrowing is increasingly the norm in American higher education,” researchers Kevin Carey and Erin Dillon write. “The long-term consequences of floating colleges on a sea of debt have yet to be fully realized, as a growing number of students leave school with tens of thousands of dollars in loans that can take as long as 30 years to repay and cannot be discharged in bankruptcy.”


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