Student Loan Debt: Impact on Demand at Wealthy Private Colleges
According to a report from Moody’s Investors Service, student enrollment demand at the 550 Moody’s-rated colleges and universities is not materially affected by student loan debt burden. The report also found that average debt per student is decreasing at these colleges and universities. Delinquency and default rates at these colleges and universities are also below the national averages.
Moody’s reports that private colleges and universities are increasing tuition discount rates instead of shifting more of the burden of paying for college to students and their families. The median discount rate for incoming college freshmen continues to increase and is approaching 50 percent.
These trends are not necessarily reflective of the nation as a whole, because Moody’s-rate private colleges and universities are wealthier than other colleges and universities. Accordingly, these colleges and universities have more financial resources available for financial aid, including gift and endowment income, and fewer low-income students, allowing these colleges to increase net tuition revenue per student.
Moody’s expects that the growing earnings gap between college graduates and non-graduates will help these colleges and universities attract more students, even as college costs continue to increase. Better outcomes, such as higher college completion and job placement rates, will also compensate for increasing student and parent price-sensitivity.
The gap in average debt at graduation between Moody’s-rated private and public colleges is narrowing. The average debt at graduation at Moody’s-rated private 4-year colleges and universities in May 2014 was $27,806, not far from the $27,056 average debt burden at public 4-year colleges and universities.
When financial aid and federal student loans aren't enough to cover all college costs, consider financing the gap with private student loans. Shop around to find the loans that best fit your needs.