Report: Student Loan Debt, College Completion Linked


A report from the Center for American Progress has examined student loan debt in the United States, comparing it to college completion rates in all 50 states, and the results suggest that college debt statistics might be misleading.

In order to determine the relationship between debt and college completion, an analysis was completed that looked at the total amount of student debt owed in each state and comparing it to the number of adults in each state who had completed at least an associate’s degree.  State-by-state figured previously released by the White House were used to determine loan amounts for each state.  Certificate graduates were not included in the count, as the American Community Survey did not separate those that earned a certificate from college dropouts.

The report, “The Relationship Between Student Debt and College Completion,” suggests that the typical amount of reported student debt is often misleading because the small debt burdens reported by some states can often look worse due to decreased levels of postsecondary schooling.  Meanwhile, other states that report a higher debt burden for borrowers is not as concerning, because many of the citizens who live there have attained postsecondary degrees.

“While there has been a lot of attention paid—and rightly so—to the enormous student debt problem in the United States, not all loans are inherently bad. It’s important to look at student loans in the context of college completion, especially since borrowers who earn degrees are far less likely to default on their loans than borrowers who drop out,” said Ben Miller, Senior Director for Postsecondary Education at CAP.

Miller continues to say that it is better to complete a bachelor’s degree program and hold $28,400 in student loan debt, the national average in 2013, than it is to have dropped out of school with only $10,000 in debt because those who complete their degree programs are less likely to default on their loans.  College dropouts account for 60% of all those who default on their loans.

According to the report, a number of states and territories including Virginia and the District of Columbia hold higher than average debt per borrower rates, but also have high some of the highest postsecondary achievement rates in the nation.  Other states such as Maryland, Vermont, Florida, and Colorado, also show similar rates.  On the other hand, states such as Louisiana, Mississippi, Ohio, Indiana, and Arkansas all show low levels of debt, but also have low attainment rates.

While the report suggests that debt itself is not a bad thing if students are able to earn high-quality degrees as a result, determining the relationship between debt and attainment is a critical step toward policy improvements.