Arkansas student loan debt at $9 billion, small part of $1.19 trillion in U.S.

Arkansas college students, past and present, are carrying student loan debt amounting to $9 billion according to U.S. Department of Education figures provided to the Arkansas Student Loan Authority. As staggering as that sounds, Arkansas is in the middle of all states – ranked at 22 – in a new WalletHub.com study measuring student debt by state.

The Wallet Hub study intended to find which states produce the highest levels of student debt relative to the strength of the economies and residents’ income levels. Wallet Hub compared the 50 states and the District of Columbia across seven key metrics such as the average student debt; unemployment rate for people aged 25 to 34; and the percentage of students with past due loan balances.

The best state for student debt was Utah, followed by Wyoming, North Dakota, Washington, Nebraska, Virginia, Wisconsin, Minnesota, Colorado and South Dakota.

The worst 10 states for student debt are Oregon, West Virginia, Alabama, New York, South Carolina, Georgia, Maine, Connecticut, Rhode Island, and in last place, Mississippi.

The percentage of student loans in past due or default status in West Virginia, one of the worst states, is two times higher than in Wisconsin, one of the best states. 

Nationally, according to the National Center for Educational Statistics compiled in January 2014 for the 2011-12 school year, there were 23 million college students, of which 70% received aid, through federal or nonfederal programs, such as loans, grants or scholarships. Those are the most recent national figures compiled by the statistics center supported the U.S. Department of Education.

“At the end of the first quarter of 2015, total outstanding student loan balances disclosed on credit reports stood at $1.19 trillion, according to the Federal Reserve Bank of New York,” noted the Wallet Hub report. “The latest figure represents an increase of $32 billion from the previous quarter and $78 billion from a year ago.”

ARKANSAS STUDENT DEBT DATA
About 55% of Arkansas college students graduate from a four-year institution with a bachelor’s degree, said Tony Williams, executive director of the student loan authority in Little Rock. Half of all students who start college don’t graduate, Williams added.

The debt figure is calculated from debt accumulated by both groups, he said. The authority focuses its work on students after graduation to prevent their loans from going into default.

The University of Arkansas Common Data Set for 2013-2014 provides the university had 20,776 undergraduates (18,455 full-time and 2,321 less than full-time undergraduates) and 8,997 (8,072 full-time and 925 less than full-time) students were awarded some sort of financial aid, said Wendy Stouffer, executive director of financial aid and academic scholarships. That calculates to 43.3% received financial assistance, Stouffer said. The Office of Institutional Research at the UA compiles the Arkansas Common Data Set annually.

Data from 2003-2004 shows 61.3% of UA undergraduates that year applied for need-based aid. In 2013-2014, 64.3% applied for need-based aid, Stouffer said.

“I do not believe that would be considered a significant increase, though my guess for the small increase would be the difference in tuition and fee costs between then and now,” she added.

Tuition and fees at Arkansas’ four-year institutions vary widely. At the University of Arkansas in Fayetteville, the tuition and fees for the school year are $234 per credit hour for undergraduate in-state costs and $677 per credit hour for out-of-state undergraduate students.

Similarly, the tuition and fees at the University of Arkansas at Little Rock range from $271 a credit hour for in-state undergraduate students to $640 for out-of-state undergraduate students. The University of Arkansas at Fort Smith is a relative bargain at $150 a credit hour for in-state undergraduates and $410 a credit hour for out-of-state students with a discount of $260 per credit hour for students from the border state of Oklahoma, Missouri, Tennessee, Mississippi, Louisiana and Texas.

On the other side, at John Brown University in Siloam Springs, the only private four-year institution in Northwest Arkansas, tuition is $11,699 per semester with general fees assessed at $535 and room and board, $4,332, according to the JBU website. About 90% of the students last year received some form of financial assistance, according to the website. 

Default rates for Arkansas range from a low of 3.3% at the University of Arkansas for Medical Sciences to a high of 33.3% at the Crossett School of Cosmetology, according to default rates released by the U.S. Department of Education in September 2014. The default rate at the UA was 6.7% UAFS, 25.1%; UALR, 10.5% and JBU, 4.8%.

Sam Sicard, president and CEO of First National Bank in Fort Smith, said there are ways to assist students rather than pumping another $350 billion into financial aid programs at the federal level as has been proposed by Democratic Presidential candidate Hillary Clinton. In a recent opinion column in The City Wire, Sicard wrote that local communities should “demand our school districts partner with our state colleges to expand college concurrent credit, and set audacious goals like Springdale, Pea Ridge, and Greenbrier have for their students to graduate high school with an associates degree.”

He wants to see the degree completion rate increase in Arkansas 

“The worst of both worlds is to leave college without a degree and have student debt to be repaid,” Sicard said.

The Arkansas Lottery scholarship program was a boost to keep student debt lower, but as lottery revenue has declined, so have the scholarship amounts, he noted.

“We need to get more students the opportunity to earn college credit while in high school,” Sicard noted. “Our community has made some headway in partnerships with Fort Smith schools and UAFS.”

“The best solution for our state and children is to step on the gas pedal to accelerate the path many communities are on to expand and improve upon innovative educational delivery models through collaboration and coordination of state and local community leaders,” he wrote.