Student debt at public colleges catching up to private schools

(Cumberland Valley Business Journal) Student debt is increasing in almost every corner of higher education, leading to some innovative approaches – such as Messiah College’s announcement this month that it will begin offering income-sharing agreements to students.

But data shows that, while average debt levels for students at small, private institutions such as Messiah is rising, it has historically been much higher than for larger, public institutions.

However, that gap is closing rapidly in Pennsylvania, as debt levels among students at the state’s public colleges have ballooned in recent years.

This phenomenon ties into a debate currently raging in the state legislature – how to handle the Pennsylvania State System of Higher Education, or PASSHE, whose 14 state-subsidized schools have seen enrollment declines and an increasing number of budget deficits.

Leaders of the PA House and Senate Education Committees commissioned a study from the RAND consultancy on the matter, with proposals generally hinting at a merger of some or all schools with other institutions.

Per-pupil state aid to PASSHE schools has dropped about 20 percent since 2008, adjusting for inflation, and tuition has correspondingly risen 22 percent, according to PASSHE data.

More problematically, since 2003, the average debt load for a student who takes loans has roughly doubled at PA public four-year schools. Public institutions in the state now generate higher average debt that private, non-profit schools such as Messiah, according to data from The Institute for College Access and Success.

As a result, the appeal of state schools to working-class families, the original target of PASSHE, has declined. A study by the Keystone Research Center found that the ratio of PASSHE students coming from families in the bottom 60 percent of incomes was 41 percent for the class of 2002, but only 35 percent for the class of 2013.