San Francisco State University/Flickr
Graduation at San Francisco State University.

College graduates in California remain less likely to take out loans to pay for their education and tend to borrow less money than their peers in most other states, according to a new report.

The average student loan debt held by graduates of California’s four-year universities was $22,785 in 2017, according to an annual report from The Institute for College Access & Success, a higher education affordability advocacy group based in Oakland.

That burden was nearly unchanged from the class of 2016’s average debt in California, $22,744, matching what the institute said was a national trend: The amount of debt students are taking out to attend college is still growing, but at a much slower pace.

California has consistently ranked among the lowest states in terms of the percentage of students graduating with student loan debt and the average debt those students hold.

Diane Cheng, the institute’s research director and co-author of the new report, said that is in part because graduates from the University of California and California State University systems — where tuitions are relatively low and financial aid robust — tend to have lower levels of debt than those from other states’ public university systems.

The institute’s report is based on surveys of public and private non-profit four-year universities, which reported the average debt held by bachelor’s degree recipients. In California, 81 percent of those institutions provided student loan data that was used in the report.

Cheng cautioned that the statewide averages could mask variations in how much money individual students borrow and how easy it is for them to pay back their loans. The rates do not include debt levels for graduates of community colleges or for-profit institutions, nor the debt held by students who start college but don’t finish.

“Those averages don’t tell the whole story for a number of reasons, and one is that there are large disparities in the groups of students who take out large amounts of debt and struggle to repay that debt,” Cheng said, such as black and Hispanic graduates and recipients of federal Pell Grants for low-income students. The institute’s report highlighted a federal study that found those graduates were much more likely to default on their loans than white students and those who did not receive Pell Grants.

Students nationwide graduated with $28,650 worth of loan debt on average in 2017, a 1-percent increase compared to the year before, according to the report. After rising sharply through the 1990s and start of the 2000s, researchers noted, federal data has shown average student loan debt stayed nearly flat between 2012 and 2016.

California had the fifth-lowest average debt load nationwide in 2017. Only students in Utah, New Mexico, Nevada and Wyoming — where borrowing declined compared to 2016 — graduated with lower average debt levels.

Half of California graduates took out loans to afford college, a percentage that placed the state 10th-lowest. Nationally, 65 percent of students took on debt.

The federal study cited in the institute’s report tracked how students who enrolled in college in the 2003-04 academic year fared over the next 12 years. It found that just 5 percent of students nationally who earned a bachelor’s degree defaulted on their loans over that time period. The default rate was 12 percent for students who earned associate’s degrees and 23 percent for those who did not complete their program.

Even among bachelor’s degree holders, though, black and Hispanic graduates defaulted at much higher rates than their white peers. The study found 21 percent of black graduates and 8 percent of Hispanic graduates nationwide defaulted within 12 years of first enrolling in college, compared to 3 percent of white graduates.

Most federal loans consider borrowers in default if they have not made a payment in 270 days, or about nine months, though the definition varies depending on the loan.

Graduates who paid for their education through Pell Grants, the federal grant for low-income college students, defaulted at a rate of 11 percent, compared to 2 percent for those who did not receive grants through the program.

Cheng said the institute is planning further research into why certain students default at higher rates than others. But she noted black students and Pell recipients are more likely to take on debt to finance their education and borrow more on average than white students and those who don’t receive Pell grants. Hispanic students are less likely to borrow and have lower amounts of debt on average than white students.

Given those disparities, Cheng said, it would be wrong to assume that “student debt is not a problem any more — or that it’s not a burden to students — just because the growth is slowing down.”

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