Recession Created ‘Perfect Storm’ For Sharp Rise In Student Loan Debt

Arizonans carry more than twice the student debt, per capita, than they did a decade ago, as the recession created a “perfect storm” for higher student debt, driving up enrollment at a time when costs were rising as state support was falling. (Photo by jeco/Creative Commons)

By Fraser Allan Best

WASHINGTON – Arizonans came out of the recession with more than twice the student debt that they carried 10 years ago, as economic forces that came with the recession created a “perfect storm” for rising debt.

The Federal Reserve Bank of New York said Arizonans carried $4,690 in student debt per capita in 2016, up from $1,930 in 2007, the year that marked the beginning of the recession.

Experts say the increase is due to state funding cuts to higher education budgets, increases in tuition and – in what may be counterintuitive for an economic recession – more people deciding to enroll in college.

“There were fewer jobs available. So you had students or older workers wanting to retrain for a job,” said Mark Huelsman, senior policy analyst at Demos, a national public policy advocacy group.

Enrollment at Arizona’s three public universities has grown substantially since the start of the recession, from a total of 127,446 in 2008 to 171,191 in 2016, the most recent year for which numbers are available from the Arizona Board of Regents. Those figures include enrollment in online courses of study.

All three schools gained, with Arizona State University posting the biggest increase, rising from 67,082 to 98,177. University of Arizona enrollment rose from 38,057 to 43,625, while Northern Arizona University saw its numbers grow from 22,307 to 29.989, according to data from the Arizona Board of Regents.

But those students were enrolling at a time when Huelsman said families across the country had less money to spend, leaving students “unable to use some wealth that they thought they’d be able to fall back on.”

Completing the “triple whammy,” Huelsman said, was a steady increase in tuition.

In Arizona, those increases were driven in large part by state cuts to higher education funding, as state lawmakers struggled to balance a budget hammered by the recession.

recent report from the Center on Budget and Policy Priorities said state support in Arizona for higher education fell from $8,827 per student in 2007 to just $5,867 per student last year, still one of the steepest drops in the country despite a recent slight uptick in state support. Arizona funding to public universities rose 4.25 percent in 2016, the first increase since the start of the recession, according to the center.

“What we see in Arizona, I think, and what we’ve seen right across the country is that during the recession states reduce their expenditures especially on a per pupil basis,” said Barmak Nassirian, the director of federal relations and policy analysis at the American Association of State Colleges and Universities in Washington.

Nassirian said the trend is a common one. He considers the decline in state funds to be the driving force behind rising tuition and in turn, deepening student debt.

The Federal Reserve numbers include all student debt held by Arizona residents, which includes debt racked up at schools outside the state. But experts say other states saw similar increases in tuition – and similar increases in student debt.

Nationally, according to the Federal Reserve data, student debt rose from $1,970 in 2007 to $4,920 in 2016, a 150 percent increase compared to Arizona’s 137 percent increase over the same period.

Nassirian is optimistic that higher levels of state support can help reverse the rise in student debt levels across the country. He points out that Arizona in particular has an obligation to make college affordable, pointing to a provision in the state Constitution.

“The state of Arizona actually has a constitutional provision that guarantees a free or as low a cost as practicable in terms of tuition at its public institutions,” he said.

11 Comments on "Recession Created ‘Perfect Storm’ For Sharp Rise In Student Loan Debt"

  1. State run liberal/socialist/communist indoctrination centers enslaving our youth with government debt. No wonder Obama and the liberals wanted to shut down private institutions of higher learning.

  2. Indoctrination comes with a very large price, both to the unwilling and unknowing “student”, and society having to retrain them to accept what is real. It is not unlike AA, ” Hi my name is Joe and I am a Progressive.” Hi Joe welcome to the real world, Trump is your President.

  3. Nassirian said the trend is a common one. He considers the decline in state funds to be the driving force behind rising tuition and in turn, deepening student debt.

    Yea, its the state’s fault, not the student for getting loans to pay for everything from housing, books, gas, cars, etc. The “students” would rather borrow than work in the summer or during school. Its like play money to them. Most have no experience with money and neither do their parents that allowed them to get into this debt pit that the taxpayer will have to absorb one more time. So pissed that a writer like this is even trying to place blame on the taxpayers once again and not where it belongs on the student and family for being just plain monetarily stupid. Yea, its my fault for not paying more for little Johnnie and Sally’s education. Well, I had a partial athletic scholarship, worked at the school and worked in the summer to graduate with NO debt hanging over my head other than graduation expenses. Now its my fault that they have student debt? Liberal bastard snowflakes want this and that and yet don’t want to put in any work to achieve the desired results. Stay in your mom’s basement and look at your participation trophies and ribbons that someone GAVE you. You didn’t earn them. Just like your degree if you even got one. You didn’t earn that wither. You want someone to give it to you and this taxpayer if fed up with the millennials BS.

  4. Dale Brethower | December 23, 2017 at 8:33 am | Reply

    What interests me most is the starting data of the “recession.” It is also the starting date of Democrat control of the House of Representatives, the beginnings of the Democrat control of government. Yes, the economy was in a mess due in large part to the high cost of post-9/11 military involvement and due in part to W’s desperate and ill-advised effort to ward of a financial disaster. But if both houses of Congress and the Presidency are won on a single issue: It’s Bush’s Fault, the incoming government should not have tried to “fix” the problem by adding so many trillions to the national debt. Including making it easy for so many college students to also go way far into debt.

  5. This is a result of “trickle down economics” that Reagan first espoused and now our grandchildren are paying the price. Then their grandchildren will repeat the cycle due to Trump’s tax cut. Half of the 99% is brainwashed to think they are part of the 1%. Just sad. A campaign to keep the public ignorant. Ducey is the epitome of this strategy.

    • Stitch – so what’s the opposite of trickle down?

      Communism is very prevalent in Tucson/Pima County. The majority of registered dems and most of the politicos are socialists/communists, although they will call themselves liberals.

      “From each according to his ability, to each according to his need.”

      To heck with those working Americans that pay income taxes, they’re not paying enough to those that don’t. When will they learn it’s not their money, “they didn’t build that”, right Stitch?

  6. “But those students were enrolling at a time when Huelsman said families across the country had less money to spend, leaving students “unable to use some wealth that they thought they’d be able to fall back on.”

    “Completing the “triple whammy,” Huelsman said, was a steady increase in tuition.”

    Obama sucked all the money out of working families, took over the student loan program and green lighted the hikes in tuition. It was a deliberate effort to institutionalize the indoctrination and financial enslavement of the youth of America to the federal government. Marxism, of which Obama is a devout prophet. Except for him of course.

  7. JD’s correct in his assessment, but left out the role of Obama’s people pushing for every Tom, Dick and Harriett getting accepted into every sort of government school. The push from D.C. was amazing, and people who had no business sitting in college classrooms, got into massive debt for life.

  8. Paying the University “Diversity Coordinator”
    $400K per year doesn’t affect the tuition rates at
    all.

    A sure sign of liberals in charge is massive
    administrative bloat.

    Anyone cite even a SINGLE example ANYWHERE
    to the contrary? [with a modicum of veracity]

  9. lot has to be placed on the ‘professional’ student, you know the ones that go to school for:
    1. A worthless degree that has no financial future.
    2. Advanced degrees where they stay in school with no plans to really enter the work force, but yet need worthless degrees to prove how smart they are!

    yes many go to school with no real goal of work in sight. I knew a guy whose daughter got a degree in marine sciences/biology and then looked for work in tucson! I dont believe they used the big buck finance scams but I dont know for sure?
    My wife has some church friends who have all kinds of degrees but they are the older generation. The younger ones want the degrees but then complain about not being able to find a job when they are moving on! Yes the type of degree/field has a great bearing on getting a job and sometimes over education is just as bad as no education. My BIL worked as a nuc engineer, did not pursue masters etc, and when the axe came all the guys with the big degrees were the first to go as they wanted too much $$. He retired was called back to work and has since retired fully. So dont blame all on the economy, the individual has a lot to do with it. Also like for my kids, told them they could go to any school as long as it was the local one! That is unless they got full ride scholarships. Both got scholarship offers but they were for tuition only, so they stayed and lived at home and got their educations. Not really in school debt but there is a little and they are paying off as they got good jobs and are successful in their endeavors.

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