Higher Education News

BOSTON—Student debt increased 3 times faster than the cost of living in the Boston area from 1993 to 2004, according to a new report released today by MASSPIRG Education Fund. Today’s new graduates carry record levels of student loans due to rising college costs, stagnating grant aid, and shifts in state spending. On July 1, interest rates on federal student loans rose to their highest level in six years, increasing almost 2 percentage points to 7.14% on current loans and 6.8% on new loans.

In “Student Debt and Consumer Spending in the Boston Area,” MASSPIRG Education Fund analyzed the Bureau of Labor Statistics’ Consumer Price Index (CPI) survey of the cost of core consumer goods like food, housing, transportation, health and apparel costs in the region. They found that between 1993 and 2004:

• Average student debt for students across the country increased by 107%
• Cost of living in the Boston area increased by 37%
• Health costs in the Boston area, including insurance, drugs, and medical care, increased by 74%.

“As interest rates climb, health care, rent and other basic expenses will have to compete with even higher student loan payments,” Explained MASSPIRG Consumer Advocate Eric Bourassa. “Add rising student debt to today’s cost of living and stagnating incomes, and you can see why more than one in four young adults are uninsured.”

In their report the MASSPIRG Education Fund recommended that Massachusetts, the federal government and colleges focus on solving the problem of student debt. Among the report’s recommendations are increasing need-based grant aid and reforms to make student loan repayment more manageable for borrowers.

“The fact that student debt is rising so much faster than the cost of living should set off alarm bells,” said Bourassa. “We need to make sure that getting a college education means more than a lifetime of debt. Unless we make loans, and college, more affordable, the problem will only get worse.”

The BLS’ Consumer Price Index survey for the Boston area includes the following counties: Bristol, Essex, Hampden, Middlesex, Norfolk, Plymouth, Suffolk, Worcester in Massachusetts; Hillsborough, Merrimack, Rockingham and Strafford counties in New Hampshire; York county in Maine; and Windham county in Connecticut