PA Among States With Highest Student Loan Debts

By Michael Carroll | From Watchdog.org

Ohio and Pennsylvania’s first- and third-place finishes on a recent national ranking of student indebtedness comes as no surprise to those familiar with the issue in the two states.

The personal-finance website WalletHub earlier this month released the study, which showed residents of Ohio, Mississippi and Pennsylvania carrying the heaviest student debt load among all U.S. states. Ohio ranked No. 3 in the category of overall student loan indebtedness and No.  20 among states in providing grants and student work opportunities.

Pennsylvania came in fourth in student loan indebtedness and 19th in offering grants and student work opportunities. The state was No. 2 in the category of highest average student debt.

“Both states are struggling with student loan indebtedness,” WalletHub analyst Jill Gonzalez told Watchdog.org in an email. “Ohio and Pennsylvania each have an average student debt of over $30,000, and over 66 percent of students have student loan debt. That’s one of the highest rates in the country.”

The study also found parallels between the two states in terms of the low availability of student jobs. Citing numbers from the federal Bureau of Labor Statistics and Indeed.com, WalletHub found that there were only six to seven student jobs per 1,000 civilians aged 16 to 24 in each state’s labor force, according to Gonzalez.

Several factors explain why the two states finished so high on the student debt ranking, she said.

“The issue comes down to [the availability of] grants for public schools, student jobs during school to deter borrowing and employment post-college,” the WalletHub analyst said.

And the debt numbers could encourage out-migration of students to other locales, according to Gonzalez.

“There might be better opportunities in other neighboring states,” she said.

Victoria Jackson, a state policy fellow at Policy Matters Ohio, a nonprofit research institute, said Ohio’s ranking on the WalletHub study comes as no surprise. Indeed, a Vanderbilt University study earlier this year rated the state 45th in college affordability.

For the lowest-income families in Ohio – those making under $31,000 annually – it would take 81 percent of their earnings to send a family member to an Ohio public university and 31 percent  to attend a community college, Jackson said.

Student debt numbers have been exacerbated by the actions of for-profit colleges, the low level of state financial aid to students and lack of regulation of loan services, she said.

“We’re finding that loan servicers are making it hard for people to pay back their loans,” Jackson told Watchdog.org. Often, students are eligible for less-burdensome income-based repayment plans but were not told about such options, she said.

Typical for-profit college career programs in the state offer graduates earnings that are so low that they fail to end dependence on food assistance, according to Jackson. Their graduates’ annual earnings come in at more than $9,000 below that of certificate earners at public colleges and universities, she said.

“The outcomes for students who attend them are so poor that it’s important to draw attention to them,” Jackson said.

For-profit colleges also tend to prey on veterans, people of color and women, and they operate in an environment where there’s little regulation or oversight, she said.

Ohio could help address its student debt problem by prohibiting for-profit colleges from receiving state grants, increasing regulation of loan services and expanding funding for Ohio College Opportunity Grants, she said.

Jackson pointed to a report from Philanthropy Ohio that found the state ranked last in the Midwest in access to need-based financial assistance for higher education students.

The Pennsylvania Higher Education Assistance Agency, which provides financial aid services to higher education students, has also been tracking the trend of increasing student debt in the state, according to spokesman Keith New.

“As a public servant, we’re trying to chip away at the student loan debt,” New told Illinois News Network.

The state agency has been conducting outreach efforts at high schools to encourage students to borrow only what they need and to ensure they will have the ability to pay back the loans, New said. The agency also operates a website, Mysmartborrowig.org, to encourage students to engage in thoughtful borrowing practices.

“We are very sensitive of the growing student loan problem in Pennsylvania …” he said. “The key to reversing it is through increasing financial literacy and empowering students at an early age to be smart in making borrowing choices.”

And because the numbers of high school graduates in Pennsylvania have been declining due to changes in demographics, the agency has been able to better meet the financial needs of students due to declining applications for aid, he said.

The agency also offers loan forgiveness programs for those in the fields of public service and teaching.