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Published: 2006

Total Pages: 16

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American colleges and universities play a pivotal role in training the nation's citizens, leaders, innovators, public servants, and educators. In today's economy, a college education is more desirable than ever before -- millions of high school students strive fro its promise and the benefits it brings for both the individual and society. In the past decade, government support for higher education has declined; as a result, tuition and fees have increased. Grants have failed to keep pace. As costs continue to swell, students are taking on more and more debt to pay for their degrees. Two-thirds of all four-year college graduates in 2004 left school with student debt, compared to less than one-third in 1993. Recent graduates, especially those with low and moderate incomes, must spend the vast majority of their salaries on necessities such as rent, health care, and food. For borrowers struggling to cover basic costs, student loan repayment can create a significant and measurable impact on their lives. This report focuses on such "burdensome" or "unmanageable" debt. Last fall, two economists, Sandy Baum and Saul Schwarz, published a report proposing a new graduated benchmark system for estimating burdensome student debt. They posit that recent graduates with very low salaries -- about half of the median individual income in the U.S. -- cannot manageably repay their student loan debt while meeting their other needs. Graduates with incomes above this minimum threshold can manageably pay no more than a certain percentage of their income on their student loan debt. Their formula takes into account the fact that recent graduates with low incomes experience financial constraints at lower debt levels than their higher earning peers. This report looks at the issue of unmanageable debt as it pertains to college graduates entering two critical public service careers: teaching and social work. Given increasing dependence on student loans, borrowers graduating from four-year schools and working in these two public service careers often carry more debt than they can manage. The prospect of burdensome debt likely deters skilled and dedicated college graduates from entering and staying in important careers educating our nation's children and helping the country's most vulnerable populations. In order to demonstrate the impact of student loan debt on public servants, we looked at average starting salaries of teachers and social workers nationally and by state and estimated what percentage of these new public servants would carry unmanageable student loan debt. "Unmanageable" means that their loan payments would have a measure and burdensome impact on their lives and would likely hinder their ability to pay for basic necessities.