Conditions

Why students are graduating on time

The United States is graduating on schedule.

Students are earning more than they ever have before and, as a result, our economy is thriving.

But in some areas, like high school, students aren’t graduating on their schedule. 

In a new report, the Economic Policy Institute (EPI) has found that student debt continues to rise, especially for those attending schools in states that are struggling to meet graduation goals.

While the report notes that student loan debt has fallen dramatically over the past decade, its authors say that the situation is still dire.

“We find that student-loan debt continues rising and the cumulative effect of these high debt burdens is that most students are still struggling to get back on track,” said Adam Hochschild, director of EPI’s  Student Debt and Economic Opportunity Program.

“We’re also seeing an increasingly high proportion of student borrowers with a loan balance of at least 30% of their income.” 

While there are still plenty of opportunities to earn a decent income in a highly competitive job market, it’s harder for students to pay back their loans and pay back the interest. 

 While the federal government does not directly subsidize student loan payments, states like California and New York do.

That means states that have more than 25,000 borrowers, like California, will get more federal money than states with fewer than 10,000. 

But students have some leverage to pay their loans off, which they can do by taking out federal student loans.

Federal loans can be forgiven if students work for two years after graduation, with interest added. 

“When a borrower graduates from college, they can get their federal student loan forgiven, and the interest is forgiven in full,” said Matthew Tapp, an EPI associate fellow. 

EPI’s analysis found that more than one in three student loan borrowers in states with the highest debt loads have had a negative loan balance.

Students in these states are also more likely to have a history of defaulting on their loans.

“The more delinquent student loans are, the more likely they are to default,” said Tapp.

“If students default, they’re going to end up in debt.” 

 Despite these challenges, there are ways to make things better for students.

One of the biggest ways is to get them to take on more debt to start paying it off.

“If you can convince them to borrow more, then that’s going to give you a much better chance at making your loans paid off,” said Hochbach. 

The federal government provides grants to states to help them with student loan repayment. 

Tapp noted that the federal Government is also stepping up to make loans more affordable. 

For example, in 2016, the Federal Housing Administration will allow borrowers to use the federal student credit counseling program to help refinance student loans if the borrower has a family member or close relative in need of financial help. 

There are also grants and loans that can be applied toward college tuition. 

More on education from EPI: The Cost of Higher Education: An Inside Look at Higher Education in America