How Congress sees Minnesota’s student debt

This student-debt study just came out this morning from the U.S. Congressional Joint Economic Committee, of which Minnesota Democratic Senator Amy Klobuchar is vice-chairwoman.

I spoke with analyst John Armstrong of the state Office of Higher Education, who was able to look at it briefly. The report seems to echo what the OHE has been saying for the past several years: Minnesota students carry some of the highest debt -- but also tend to have lower default rates.

He told me:

"It conveys to us that our population is confident that the debt they are borrowing may enable them to get jobs."

The data is about a year newer than the OHE report, he said, though it doesn't break debt down as comprehensively as the state did.

A couple of new bits seemed to be graduates' initial earnings and the debt-to-earnings ratio.

I did some Excel spreadsheet sorting to find out how Minnesota stacks up overall:

• Amount of debt: 3rd with $30,411

• Percent of students with debt: 6th with 71 percent

• Annual earnings: 19th with $44,306

• Debt-to-earnings ratio: 11th with 69 percent (That's how much of a year's earnings is taken up by debt)

• Delinquency rates: 3rd lowest with 9.8 percent. (Could be a proxy for default rates.)

(I'm no Excel whiz, so please let me know if I've misread anything.)

I asked Armstrong about the debt-to-earnings ratio. He told me:

"It's certainly concerning -- the amount of loan obligations compared to an average starting salary that students may get into. But at the same point, it appears, at least in terms of delinquency and default rates, that Minnesota borrowers are meeting their obligations."

I also found some interesting national figures (I'm using the report's language):

• Student loan debt has almost doubled in the past five years, increasing from $550 billion in the fourth quarter of 2007 to just under $1 trillion in the first quarter of 2013.

• Two-thirds of recent graduates have student loans, with an average balance of more than $27,000.

• On average, recent graduates left college with student loan debt of 60% of their annual income.

Armstrong said the report was heavy on policy. (Clarification/correction: I'd written that he thought it was a political document.) The report says debt will only increase for future borrowers if the interest rate on new federally subsidized Stafford loans is allowed to double from 3.4 percent to 6.8 percent on July 1st.

Below is the executive summary, followed by the report itself and Klobuchar's press release. They're not long.

Here's the report:

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• How past U of M presidents view higher-ed today
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