Though student loan debt nationwide increased 5 percent in 2010 according to a study released earlier this month, at Yale, that figure has declined.
The average debt faced by Yale College graduates in the class of 2010 was roughly 14 percent less than the average debt for the graduating class of 2009, according to a study conducted by the Oakland, Ca.-based Project on Student Debt — a nonprofit research organization — and Director of Financial Aid Caesar Storlazzi said that figure has continued to decrease for the class of 2011. The study placed Yale’s average student loan debt for the class of 2010 at $9,254 — roughly $15,000 below the national average — and Storlazzi said the class of 2011 graduated with an average debt of $9,000, partly due to Yale’s generous financial aid policy.
The reduction in Yale’s student debt followed the University’s decision to adopt a “no loan” policy in the 2008-’09 academic year, Storlazzi said, which allowed undergraduates on financial aid to graduate with no-loan debt. Yale, Harvard, Princeton, Columbia and the University of Pennsylvania are the five Ivy Leagues schools currently to offer financial aid that is loan-free.
“Not all of the Ivies can afford to subsidize a financial aid program with a no-loan component,” Storlazzi said. “Graduates from other Ivies that package loans up front will have higher debt levels at graduation than no-loan schools.”
Ronald Ehrenberg, a professor at Cornell University and leading expert on higher education, also said few universities can afford “no-loan” policies like Yale, Princeton and Williams. Student debt has risen dramatically over the past year, Ehrenberg said, because college costs have increased while family incomes have remained stagnant.
“Debt is not a problem at Yale,” Ehrenberg said. “You are very privileged to be at a university with such great financial aid.”
Dean of Admissions Jeffrey Brenzel said the decreasing amounts of average loan debt seen by graduating Yale students “cannot hurt” the University’s efforts to attract prospective applicants. Still, he added that differences between the loan debt of graduates among the nation’s top colleges and universities are relatively small and unlikely to affect students’ admission decisions significantly.
The Project on Student Debt report found that 28 percent of Yale students in the class of 2010 graduated with some form of loan debt — 18 percent graduating with federal debt and 10 percent with non-federal debt. The study also found that 11 percent of the class of 2010 received federal Pell Grants, which do not have to be repaid.
Days before the Project on Student Debt released its findings, the Obama administration announced a new program, Income Based Repayment or “Pay As You Earn,” that will cap loan payments for about 1.6 million students and forgive debt left after 20 years of payments. Storlazzi said the new federal program will not reduce debt incurred by Yale students, but will assist them in paying off loans. “Pay As You Earn” will aid professional school students more than undergraduates, Storlazzi added, because they tend to have higher average debt levels.
“[Income Based Repayment] is a good thing for students who qualify, and it will go a long way to relieving the stress in repayment that many students are feeling today,” he said.
Fifty-seven percent of undergraduates received need-based financial aid from Yale in the 2010-’11 academic year.