Iowa ranks 4th for average student debt

The state of Iowa fell two spots - from second to fourth in the nation - for average student loan debt carried by university and college graduates in 2009, according to an annual report released Thursday.

Iowa ranked second in 2008, behind the District of Columbia, in the Project on Student Debt report, with average debt of $28,174 for graduates of Iowa's public universities and private colleges.

But Iowa dropped two spots to fourth in the 2009 report, behind the District of Columbia, New Hampshire and Maine, with average debt of $28,883. The national average student debt in 2009 was $24,000, according to the report, an increase of 6 percent. The report looks at bachelor's degree recipients at public and private colleges during an academic year.

Iowa ranked second in the nation in 2009 for the percentage of students graduating with loan debt, at 74 percent.

Iowa's average student debt ranked first in the national study several years ago.

“Iowa likes to be first in a lot of things, but this is not one of them,” ISU financial aid Director Roberta Johnson said. “Iowa has been in the spotlight as a result of this national report for a number of years. It's raised the consciousness level across the state, and I think that's a good thing.”

It's also likely the economy has played a role, as fewer private loans are available to students, financial aid leaders in the state said. In those cases, parents may take out federal parent loans instead, which leads to reduced student debt, officials said.

The UI, ISU and UNI all saw reduced student loan debt last year.

Iowa's private colleges also have worked to provide more counseling to parents and students about debt as private loans are more difficult to get, Gary Steinke, president of the Iowa Association of Independent Colleges and Universities, said. Financial aid counselors talk to students about the “hard choices,” Steinke said - living in the dorms rather than off campus, not using student loan money to buy a car or getting a part-time job to help with those expenses.

“It's been an absolute focus of our financial aid people at all 29 of our campuses,” he said. “They're being told to be sure you're borrowing only what you need for your education.”

The colleges also have worked to provide more money in scholarships and grants - $276 million last year, Steinke said, which is an increase of $30 million to $40 million over the past few years.

While the UI ranks below the state and national averages for student debt, and below the state's average for the percent of graduates with debt, officials still make reducing debt a priority, UI financial aid Director Mark Warner said. UI graduates had average debt of $22,684 last year.

“We continue to do what we can to minimize student debt, but in the context of this report, we look OK,” Warner said.

ISU was named in the report as a “high debt” school. Johnson said ISU officials in recent years have stopped recommending private loans for students and are working to educate students more on personal finance.

“Our indebtedness level has been dropping,” she said. “It's coming down slowly. I have warned people, you're not going to turn this ship around on a dime.”