The student loan crisis in America is worse than ever. About 45 million borrowers owe $1.56 trillion in student loan debt. One million borrowers default on their loans each year, and 11.5% of student loan balances are at least 90 days delinquent or in default.
With the costs of college continually increasing, students and parents have taken on major debt to pay for college and graduate school. But some schools are a lot more affordable than others, having lower tuition costs or offering significant financial aid.
We took a closer look at colleges and graduate schools across the country to see where students and parents take on the most federal student debt to attend.
- Students go most into debt to attend private schools — especially medical universities. Roseman University of Health Sciences in Nevada, Tufts University in Massachusetts and Loma Linda University in California occupy the top three spots.
- Graduate school is where debt really balloons. While the average direct unsubsidized loan for an undergraduate is $4,059, the average unsubsidized loan for a graduate student is $18,408.
- Students go into debt to attend many Ivy League schools, such as Harvard, Yale, Columbia and the University of Pennsylvania.
- Parents go most into debt to pay for art school. Just looking at parent PLUS loans, Berklee College of Music in Massachusetts comes out on top with the average recipient taking on nearly $40,500 in loans, followed by the California Institute of the Arts and the ArtCenter College of Design (also in California), with average parent PLUS loan values of $38,902 and $37,625, respectively.
Private colleges lead to more debt than public schools
According to our findings, undergraduate students take on the most debt to attend private colleges, such as Alliant International University in California, Roseman University of Health Sciences in Nevada, Pacific Oaks College in California and Harvard. In fact, the top 10 schools where undergraduates incur the most debt are private. We only see a public school once we get to No. 11 on the list — Athens State University in Alabama.
This finding isn’t surprising, considering that private schools tend to have higher tuition costs than public ones. According to the College Board, average tuition and fees at a private four-year college run $32,410 a year, three-plus times higher than the average tuition and fees at a four-year public college for in-state students ($9,410). Of course, public college costs jump to $23,890 a year if you’re an out-of-state student.
Attending a public college as an in-state student could keep costs down, as choosing to go out of state could leave you with heavy debt upon graduation. And even though many private schools have high rankings, earning your degree at one could leave you with burdensome student loans.
Graduate school is where debt balloons the most
Earning your graduate degree could enhance your expertise and increase your earning potential, but it might lead to even more student loan debt. After analyzing data for 2,273 schools, we found the average direct unsubsidized loan for an undergraduate was $4,059. For graduate students, that average grew to more than four times bigger at $18,408.
We see some of the highest rates of borrowing at medical, dental, pharmacy, veterinarian and law schools, with graduates leaving school owing $140,000 or more. Graduate loans can be tricky to pay off, especially if you borrow grad PLUS loans.
With an interest rate of 7.6% and a disbursement fee of 4.248%, PLUS loans are the most expensive loans offered by the federal government. So not only do graduate students tend to take on more debt to earn their degree, but their long-term costs of borrowing are high as well.
According to our findings, Roseman University of Health Sciences, Tufts University and Loma Linda University took the top three spots for schools where graduate students go most into debt. In total, the amount of direct unsubsidized and grad PLUS loans per student at these three universities were $46,781, $37,452 and $35,990, respectively.
Students go heavily into debt to join the Ivy League
There are eight Ivy League schools in the U.S. — Brown, Columbia, Cornell, Dartmouth, Harvard, University of Pennsylvania, Princeton and Yale — and all are considered among the most prestigious schools in the country. Given their reputation and ranking, it’s not surprising that accepted undergraduates are doing whatever it takes to attend, including taking on significant amounts of federal student loans.
Harvard, Columbia, University of Pennsylvania and Yale appear in the top 20 schools where students take out the highest amount of direct subsidized and unsubsidized student loans as undergraduates. At Harvard, 296 recipients share $1,676,667 in those types of student loans. At Princeton, 133 recipients share $731,950.
Note that these figures don’t include private student loans, which could add significantly to students’ debt burden via high interest rates. Nor do they mention parent loans, which could be hefty among parents of Ivy League students. Although Ivy League schools have excellent reputations, it’s useful to consider whether earning your degree at one is worth the cost.
At the same time, don’t write off an Ivy League school because of its initial price tag. Many of these schools offer considerable financial aid, with Harvard, Princeton and Columbia now offering to meet 100% of your demonstrated financial need.
Despite these policies, you might still end up with a gap in funding that requires you to borrow. But if your school provides a lot of financial aid, the amount you must borrow will go way down.
Parents take on the most debt to pay for art school
College students aren’t the only ones dealing with student loans. Many parents take on debt to finance their child’s education, too. For the Class of 2018, 14% of parents borrowed an average of $35,600 in parent PLUS loans. As of the fourth quarter in 2018, 3.6 million parent borrowers owe $89.9 billion in student loans. That number could be even higher if you take private student loans into account.
According to our study, parents go most into debt to pay for art school for their children. With parent PLUS loans, Berklee College of Music comes out on top with the average parent taking on nearly $40,500 in loans.
Like grad PLUS loans, parent PLUS loans come with relatively high interest rates of 7.6% and an origination fee of 4.248%. Since parent PLUS loans aren’t eligible for most income-driven plans, paying them back can be especially difficult for people who can’t afford their monthly payments.
Compare tuition costs before choosing a college
Despite the scary statistics about student loan borrowing in the U.S., student loans aren’t all bad. When used wisely, they enable students to further their education and earn a valuable degree.
But they become burdensome if you borrow too much or get slapped with high interest rates. So before taking out student loans, make sure to compare costs of attendance among various schools.
Although some students feel pressured to go to top-ranked schools, ranking and reputation shouldn’t necessarily be your only consideration. By taking finances into account, you can choose a college or graduate program that helps you achieve your goals without breaking the bank for you or your parents.
And if you do need to take out a private student loan on top of federal student loans, make sure to do your homework first. Research a variety of lenders so you can find the best possible rate for your college loan.
The same advice goes for refinancing student loans you already have. If you’re managing a lot of student debt, consider refinancing for better rates and terms. By taking a proactive approach with your student loans, you can prevent them from dragging down your quality of life.