The student loan crisis has deepened, with the average graduate in the Class of 2018 leaving school with $29,800 in debt. To combat this, some colleges have pledged to reduce borrowing rates among students.
Harvard and Columbia, for example, cover tuition costs for students from families that make less than $65,000 and $60,000 per year, respectively. Others, such as Williams, Amherst and Vassar, offer generous financial aid packages to meet their students’ full demonstrated financial need.
But have schools’ efforts to ramp up financial aid paid off for students? Student Loan Hero took a look at the average borrowing per student in the 2011-12 academic year and compared it to the average borrowing in 2016-17 to determine which private colleges have succeeded in reducing student borrowing.
- New York City’s Touro College saw a 73.6% decrease in the total amount borrowed by first-time, full-time undergraduates between 2011-12 and 2016-17. Park University and St. Joseph’s College-New York came in second and third on our list, having reduced student loan borrowing by 69.4% and 68.6%, respectively.
- Though these colleges were successful, only 383 of the 850 private four-year schools (45%) that Student Loan Hero analyzed lowered the average borrowing per full-time undergraduate in this five-year period.
- Not all schools lowered average borrowing among their students. At Bethel University, Southwestern Christian University and Wiley College, average borrowing actually increased during this period by 351%, 244.4% and 221.1%, respectively.
5 schools that reduced student borrowing the most
After comparing average student loan debt upon graduation between 2011-12 and 2016-17, Student Loan Hero uncovered which schools reduced student loan borrowing the most. These five colleges saw their students’ loan balances go down over this five-year period.
1. Touro College, New York, N.Y.
Touro College’s 19,000-plus students don’t have to borrow as much as their predecessors did, since Touro College saw a decrease in the amount students borrowed by 73.6% over the five-year period under consideration.
In 2011-12, students borrowed an average of $2,770 to attend Touro. But in 2016-17, the average student borrowed just $731. What’s more, the percentage of students who borrowed went way down, from 82% in 2011-12 to only 13% in 2016-17.
One reason for its success may have to do with the substantial growth in school funds — Touro’s college endowment went from $1.9 million to over $12.3 million. That said, its grant awards to students actually decreased and tuition costs went up.
Perhaps as Touro College grew more established, it attracted greater numbers of students who didn’t borrow as much to attend (or weren’t eligible to borrow federal loans, as is the case with international students).
2. Park University, Parkville, Mo.
Park University made second place on our list, with average student loan borrowing going from $3,763 to $1,153. While the percentage of students who borrowed went up slightly — from 62% to 68% — the average amount borrowed went down by 69.4%.
Surprisingly, Park University, like Touro, saw its net cost for students increase during this same period. Plus, its average grant awards shrunk for first-time, full-time undergraduate students.
But the college’s endowment grew by 39%, from $53.9 million to $75 million. Perhaps it directed some of this increased funding into financial aid for low-income students. Even though its average grants appeared to decrease, it may have redistributed its aid in such a way to provide financial aid to those who need it most.
3. St. Joseph’s College-New York, Brooklyn, N.Y.
Another New York City college made the list of schools that reduced student borrowing the most. The average first-time student at St. Joseph’s College-New York borrowed 68.6% less than their 2011-12 predecessor.
Although the percentage of students borrowing increased slightly from 52% to 58%, the average amount borrowed went from $2,956 to $928. So while more students are borrowing to earn their degrees from St. Joseph’s, those students aren’t borrowing as much.
4. Lane College, Jackson, Tenn.
Lane College saw borrowing among its first-time, full-time undergraduates decrease by 65.7%, While students were borrowing an average of $6,275 in 2011-12, that number shrank to $2,155 in 2016-17.
This change may be reflective of the 17.9% increase in the school’s endowment, it may also have to do with the growth in institutional grants. While the average grant was just $316 in 2011-12, it grew to $1,522 in 2016-17.
5. Iowa Wesleyan College, Mount Pleasant, Iowa
Last on our top 5 list of colleges that reduced borrowing the most is Iowa Wesleyan College, a small liberal arts college that saw the average amount borrowed among first-time undergraduates decrease by 63.1%.
While the 2011-12 cohort took out an average of $5,525, that number dropped to $2,036 five years later. Like some of the other schools on this list, Iowa Wesleyan actually saw costs increase during this period and institutional grant awards get smaller.
But its endowment grew by more than $4 million, suggesting that the college might be subsidizing costs for students in other areas or, perhaps, enrolling more students who aren’t relying as much on student loans to cover tuition.
Schools that saw no change in student borrowing
For some colleges, the average borrowing per full-time student stayed pretty much the same during this five-year period.
Bethel University in St. Paul, Minn., Mount Vernon Nazarene University and Ohio Northern University saw the average amount students borrowed decrease by only 0.1%, a negligible amount. Similarly, Bethune-Cookman University and Savannah College of Art and Design, among a few others, saw the amounts borrowed increase slightly, by only 0.1%.
That said, all of these colleges had fewer students borrowing. Bethel University saw a decrease from 72% to 70%, and Mount Vernon Nazarene University saw a drop from 82% to 77%. Ohio Northern University had the biggest decrease, with 93% of students borrowing in 2011-12 and only 70% of students borrowing in 2016-17.
Ohio Northern University saw its net price for students who received grants and scholarships decrease slightly over the years, as the school’s endowment grew by more than $30 million. While it may not be reducing debt burdens for borrowers very much, it appears that the school has enrolled more students who don’t need to borrow student loans at all.
Whether this speaks to its financial aid or rising income levels among its student body, we can’t be sure.
Where student borrowing increased between 2011-12 and 2016-17
While rates of student loan borrowing have passed their peak in recent years, they spiked significantly at some colleges. These five schools saw the biggest increase in average debt per student in this five-year period.
1. Bethel University, McKenzie, Tenn.
While some colleges saw a drop in student borrowing as big as 73%, Bethel University in McKenzie, Tenn., saw an increase of 351%. First-time, full-time students borrowed just $1,147 in 2011-12, but they took on an average of $5,173 in student loans five years later.
Surprisingly, the average net price for students who received grants and scholarships decreased by nearly $3,000 and average institutional grants and scholarships went from $2,526 to $8,249. But the list price for students who live on campus increased by more than $5,000.
Although Bethel University appears to have expanded financial aid for some students, its efforts haven’t been enough to lower student loan borrowing.
2. Southwestern Christian University, Bethany, Okla.
Southwestern Christian University also saw a big increase in student borrowing, going from an average of $1,108 to $3,816. Although this increase is a big one (244.4%), the amount that students are borrowing is still relatively low compared to many colleges.
We also see that grant awards increased by nearly $5,000 and net costs for students who received grants went down by more than $7,500. So while Southwestern Christian University appears to be expanding financial aid for students, it may need to do even more to reduce its students’ debt.
3. Wiley College, Marshall, Texas
Wiley College saw one of the biggest increases in the percentage of students who borrowed loans, going from 26% in 2011-12 to 75% in 2016-17. Students are borrowing more, too, with the average amount borrowed per enrolled first-time, full-time undergrad increasing by 221.1%.
While its average grant award increased slightly, the college’s net price for students who received grants rose by 37.2%, which might explain some of the increase in student borrowing. But like Bethel University and Southwestern Christian University, the average amount borrowed is still relatively low — $1,674 in 2011-12 and $5,375 in 2016-17.
4. LeMoyne-Owen College, Memphis, Tenn.
At LeMoyne-Owen College, students borrowed 202% more in 2016-17 than 2011-12, going from an average of $2,635 to $7,960. The average grant and scholarship award went up slightly, from $631 to $842, but it wasn’t enough to put a damper on student borrowing. While 78% of students borrowed loans in 2011-12, 88% borrowed in 2016-17.
5. Saint Joseph’s College of Maine, Standish, Maine
Finally, Saint Joseph’s College of Maine had an increase of 194.3%, with the average debt going from $2,502 to $7,362 five years later. Although the college’s grant awards went way up — from $4,258 to $15,982 — they didn’t make much of a dent in the average net price for grant-receiving students, who paid $25,290 in 2011-12 and $25,694 in 2016-17.
Although increasing financial aid seems like it would diminish increased borrowing among students, it appears to be only one piece of the puzzle when it comes to lowering debt.
What factors play into the rate of student loan borrowing?
With tuition costs steadily on the rise, students have to take on significant debt to earn their degree. And unfortunately, many graduates end up underemployed and struggle to keep up with their student loan payments.
If colleges are committed to lowering student loan borrowing, they’ll have to find ways to reduce tuition costs and expand financial aid. But as our data revealed, increasing grants and scholarships might not be enough to cap borrowing.
While Touro College saw the average amount of loans students borrowed go down by nearly 74%, it counterintuitively provided smaller grant and scholarship awards and had a net increase in costs among students who received grants. On the other side of the spectrum, we saw the average amounts students borrowed at Bethel University (Tenn.) increase even though grants and scholarships got bigger.
Based on these surprising findings, there must be a multitude of factors that play into student debt rates, including a school’s endowment and the socioeconomic make-up of its student body. Increases in cost of living may also play a part in how much students need to borrow.
By digging into the root causes of student loan borrowing, as well as making an effort to reduce tuition costs, colleges can take more effective actions to lower debt among their students.
How to avoid borrowing too much in student loans for college
While a certain amount of student loans can enable you to earn a valuable degree, too much debt can weigh down your finances for years to come. Before selecting a college, compare your costs of attendance to find a school that works for your budget.
If you decide to borrow student loans, make sure you understand what you’re getting into before signing on the dotted line. Use a student loan calculator to estimate your future monthly payments and see how much interest you’ll pay over the years. And find the lowest rates you can on a student loan, whether you borrow a federal loan, a private student loan or a combination of both.
Regardless of your family’s income level, make sure to submit the Free Application for Federal Student Aid (FAFSA) to put yourself in the running for financial aid. You should apply for grants and scholarships from your school, state or a private organization to further subsidize the costs of your education.
Finally, consider making small payments on your student loans while in school to reduce interest. Once you graduate, explore student loan refinancing options, as refinancing could lower your rate and save you money on your student debt.