Student Debt: A National, State, Institutional or Personal Problem

Second in a series on student educational debt.

Nearly everyone looks at student debt as a national problem. “True ‘dat,” as they say in South Louisiana, but it must be viewed from the state, institutional and personal level simultaneously. Here is why:

If student debt were a national problem, it could only be so if all states treated students equally. That is not the case. States grant aid to full-time students differently.

For example, Montana grants less than $10 per full-time equivalent student in grant aid. On the other end of the spectrum, Georgia grants $2,370 per full-time equivalent student in grant aid. A student from Montana and a student from Georgia, who each seek federal grant aid, cannot be granted the same level of aid because of differing levels of state support, per the College Board. In Georgia, financial need is not even considered. Moreover, state grant expenditures as a portion of the total state support vary widely. Montana’s state grants are less than 1% of the total spending for higher education. In contrast, the District of Columbia allocates grants that account for 37% of the District’s total spending on higher education.

In the 1978-1979 school year, the average state support for grants in aid to undergraduate students was $440 per FTE and solely need-based. In 2018-2019, the average state support for grants-in-aid to undergraduate students climbed to $930 per FTE, but over 25% of those grants are now merit-based. This trend for grants in aid to recognize merit and student ability, which indicates a sound investment based on the likelihood of success, is healthy from my perspective. As attractive as it may be to grant aid to students equally, regardless of ability, it would not likely prove to be a prudent investment. Additionally, this approach could shift the sense of responsibility from the student to the state.

Levels of support through direct state appropriations vary markedly from state to state. The top quarter percent of states supporting higher education range from over $8,000 per full-time student to almost $23,000 per full-time student. California, New Mexico, Illinois, Georgia, North Carolina, New York, Connecticut, and Massachusetts are in the top 25%. In the lowest 25%, where state support per full-time equivalent student varies slightly under $2,500 to over $5,000 per FTE, were Arizona, Colorado, Kansas, Missouri, Pennsylvania, West, Virginia, and Mississippi, among several others, according to the National Center for Science and Engineering Statistics. The tallies above do not clarify where the responsibility for costs and debt lie.

Lastly, institutional revenues or the combined state and local funding for universities vary widely. New Hampshire invests the least in higher education from all state and local sources, totaling slightly over $2,000 per full-time equivalent student. In Alaska, total spending from state and local sources exceeded $19,000 per student. Texas was slightly less than the US average of $8,200 per student.

Other forms of support for higher education come from numerous sources, such as research and development funding. There is marked variability among institutions within states and among states regarding research and development spending. Records from 2019 compiled by the National Science Foundation show that Johns Hopkins University spends over $2.9 billion in research and development efforts. On the other end of the scale, Southern California University of Health Sciences spends slightly over $900,000 on research and development. Significant research and development expenditures affect every aspect of university life, including the cost of attendance for undergraduate students who may not be directly impacted by research and development funding. Other considerations include, but are not limited to, the price of tuition and fees, net prices after grants-in-aid, institutional finances, enrollment trends, family income, federal student aid, Pell grants and philanthropic support.

Student borrowing rests firmly on the shoulders of students. In March 2020, 50% of borrowers had less than $20,000 in debt. However, the canary in the coal mine, 45% of federal education loan debt was held by 10% of borrowers owing $80,000 or more. Student indebtedness ranges from $29,500 in North Dakota to over $55,000 in the District of Columbia, per The Integrated Postsecondary Education Data System. This is a troubling figure. Default rates are increasing, along with the student mindset that somebody else may take care of the problem. In nearly every national election for offices from the Congress to the Presidency, political dialogue includes a discussion of ways to forgive student debt. However comforting the goals of relieving student debt may be, nothing currently lifts the borrowing burden off the backs of students.

There may not be a student debt problem after all. The real and more vexing problem may be the concept of individual fiscal responsibility in a free society.

Student indebtedness may be the tip of the iceberg that sinks a free society.

Walter V. Wendler is President of West Texas A&M University. His weekly columns are available at