Digging Deeper: Making Sense of Student Loan Debt in Texas

Digging Deeper: Making Sense of Student Loan Debt in Texas

Jeff Webster, Assistant Vice President, Research and Analytical Services, TG

Melissa Shook, Research Specialist, TG

Levels of support to achieve graduation goals

Free tuition

Substantial need-based grants

Need-based grants, work part-time

Loans and need-based grants

Loans only

Work full-time, attend full-time

Work full-time, attend part-time

High

Low

Gra

duat

ion

Rat

es

What we are going to cover?

Texas Context

• Compare Texas undergraduates to U.S. undergrads (Fall 2007 only)

• Differences largely stem from source of aid and enrollment patterns

• Similarities may be due to low rates of persistence in Texas

Reliance on student loans

65% of student aid in Texas comes in the form of loans, compared to 55% for the U.S.

Texas U.S.

Loans 65% 55%

Grants 34% 44%

Federal Work-Study 1% 1%Award Year 2007-08. Source: SOSA 2010, p 36

Source of student aid

Texas U.S.

Federal 83% 71%

State 8% 7%

Institutional 9% 22%

Award Year 2007-08. Source: SOSA 2010, p. 35

Texas students are much more likely to receive aid from the federal government.Texas students are much less likely to receive institutional aid.

Undergraduate enrollment patterns

Texas U.S.

4-year Public 33% 32%

4-year Private 8% 14%

2-year 54% 44%

Proprietary 6% 10%Award Year 2007-08. Source: NPSAS, 2008

Texas has a much smaller percentage of students attending 4-year private institutions than the nation as a whole.

A much larger percentage of Texas students attend community colleges.

Total college cost by school sector

Texas U.S. Difference

4-year Public $17,394 $18,628 -$1,234

4-year Private $30,932 $36,176 -$5,244

2-year $13,242 $12,490 $752

Award Year 2007-2008. Source: SOSA 2010, pp.29-32

It is a lot more expensive to attend a 4-year private institution than a community college.

Even though 4-year private colleges in Texas are less expensive than in the U.S., a lot fewer Texas students enroll in 4-year private institutions.

Community colleges in Texas are more expensive than in the U.S., yet more Texas students choose them.

The cost difference between a 4-year public and a community college is much smaller in Texas than the U.S.

Academic intensity

Texas U.S.

Full Time 40% 48%

Part Time 60% 52%

Award Year 2007-08. Source: NPSAS, 2008

Texas students are far less likely to attend school full time.

College GPA

Texas U.S.

Low 34% 28%

Medium 39% 37%

High 28% 34%


Texas students are more likely to have a lower college GPA.

Graduation rates

Graduation / Transfer Rate

Texas U.S.

4-year Public 74% 67%

4-year Private 83% 79%

2-year 40% 47%

Proprietary 63% 69%Award Year 2007-2008. Source: IPEDS, 2007

2 year schools in Texas have lower graduation rates than the rest of the U.S.2 year schools have the lowest graduation rates per school sector.

Borrower rates

• Identify the influence of school choice and the likelihood of borrowing

• How demographics affect borrowing

Percent who borrow

Texas U.S.

Borrow 33% 39%

Do Not Borrow 67% 61%


The difference between those who borrow in Texas and their national counterparts is statistically significant.

Source of loan

Texas U.S.

Federal 87% 90%

Private 32% 36%

State 3% 1%

Institutional 3% 1%Award Year 2007-08. Source: NPSAS, 2008

The primary sources of student loans are the federal government and private lenders.

School sector

Federal Private

Texas U.S. Texas U.S.

4-yr Public 44% 42% 13% 14%

4-yr Private 52% 55% 21% 25%

2-yr 8% 10% 4% 4%

Proprietary 96% 88% 57% 42%Award Year 2007-08. Source: NPSAS, 2008

• Community college borrower rates are low.• Borrower rates at proprietary schools are high,

especially in Texas.

Academic intensity

Federal Private


Full-Time 39% 48% 14% 19%

Part-Time 22% 23% 9% 10%


Part-time students are less likely to borrow, and Texas has a higher percentage of part-time students than the U.S. as a whole.

Full-time Texas students are less likely to borrow than their U.S. counterparts.

First generation

Federal Private


First-generation 28% 34% 14% 19%

Not first-generation

11% 15% 11% 14%


First-generation students are more likely to borrow (at least federal loans).Texas first-generation students are less likely to borrow than their national counterparts.

Hours worked per week

Federal Private


Zero 32% 37% 10% 14%

1-15 33% 39% 11% 16%

16-35 29% 35% 12% 15%

35 or more 24% 30% 12% 13%Award Year 2007-08. Source: NPSAS, 2008

Regardless of hours worked, Texas students are less likely to borrow.

Dependency Status

Federal Private


Dependent 31% 37% 12% 15%

Independent 27% 33% 11% 13%


Regardless of dependency status, Texas students are less likely to borrow.

Parental income (dependent students)

Federal Private


$0-20K 32% 37% 10% 14%

$20K-50K 33% 39% 11% 16%

$50K-80K 29% 35% 12% 15%

$80K or more 24% 30% 12% 13%Award Year 2007-08. Source: NPSAS, 2008

Regardless of income, Texas students borrow less than their U.S. counterparts.

Federal Private


White 25% 35% 10% 14%

Black 43% 46% 16% 17%

Hispanic 31% 30% 12% 13%

Other 24% 28% 9% 10%Award Year 2007-08. Source: NPSAS, 2008

African Americans are the most likely to borrow.The biggest difference is among White students, where those in Texas are far less likely to borrow.

Hispanics in Texas are more likely to borrow than White students, unlike the national statistics.

Race and ethnicity

Grant type

Federal Private


Pell 53% 61% 14% 18%

State 59% 52% 14% 15%

Institutional 55% 50% 15% 18%Award Year 2007-08. Source: NPSAS, 2008

Texas Pell grant recipients are less likely to borrow than U.S. Pell grant recipients.

Summary

• Texas students are less likely to borrow. • Nearly all students who borrow take out federal loans.• A third of borrowers have a private loan.• Borrower rates vary by school type• Part-time students are less likely to borrow• Texas Hispanic students are more likely to borrow than

Texas White students.

Debt levels

• The (National Postsecondary Student Aid Survey) NPSAS 2008: Snapshot of student debt in a given year.

• MBI at the point a student leaves college gives a more complete picture of debt.

NPSAS key findings

• Texas borrowing amounts are similar to U.S. borrowing amounts.

• Texas full-time students borrow less from private sources than their national counterparts.

• Texas “workers” borrow less from federal sources than their national counterparts.

• Texas “students” borrow less from private sources than their national counterparts.

• Texas White borrowers borrow more from federal sources than their national counterparts.

Median borrower indebtedness

Award Year 2007-08. Source: SOSA 2010, p.60

MBI by school sector


MBI by enrollment status


MBI by Texas region

Panhandle$14,395

West$8,259

Central$13,065

Rio Grande$7,125

Gulf Coast$12,691

East$11,000

Metroplex$12,317


Summary

• One year snapshot of Texas debt shows simple patterns of indebtedness to U.S. borrowers

• Cumulative TG-borrower debt levels show steady 10-year increase

• Large MBIs possible only where students have persisted (thus lowering the likelihood of default)

The Texas paradox

• The majority of aid that goes to Texas students is in the form of loans.

• Yet, Texas students are less likely to borrow than their U.S. counterparts.

How can this be?

• One factor may be the choice of school.• Fewer Texas students attend 4-year private colleges

(where institutional grants are common and borrowing is heavy).

• A greater percentage choose a community college (where bargain hunters attend part-time and appear averse to borrowing).

Policy implications

Policy implications (continued)

• Perhaps the most telling statistical comparison from NPSAS 2008…

– First-generation students in Texas = 39% of total enrolled

– First-generation students in U.S. = 39% of total enrolled

• Based on Texas youth demographics, one wonders where first-generation students went.

• Perhaps either they didn’t gain access, or dropped out quickly.

Questions?

This presentation is available for download at

www.tgslc.org/tgconference.

Documents

Digging Deeper: Making Sense of Student Loan Debt in Texas