Washington Ranks 40th in Student Debt Per Borrower; National Trend toward Outcome-Based Funding of Colleges Continues

Seattle Times higher education reporter Katherine Long writes that a new study finds Washington among the states with the lowest student debt per borrower. 

The latest data, from a company that provides information about student loan refinancing, shows that the average undergraduate student who graduated from a Washington public or private college in 2015 borrowed $24,997 to complete college. About 56 percent of grads had debt upon graduation.

Among all states, Washington ranked 40th in terms of debt per borrower — that’s a good ranking, according to the study by lendedu.

Go here for Washington data.

Long makes an important point in her story.

The study may say as much about the composition of colleges in Washington as it does about the cost of college here. Lendedu found that of the 250 colleges with the highest amount of student loan debt per borrower, 82 percent of the institutions were private.

Washington doesn’t have a large number of private schools; the college-going scene here is dominated by big public universities, like the University of Washington and Washington State University.

She also points readers to 

…the data compiled by the Institute for College Access and Success, which gets its data on student loans from the same source and publishes it as The Project on Student Debt. That website has a ten-year debt comparison figure that shows how debt has changed over time.

And she notes that the percentage of students graduated with debt has “barely budged” between 2004 and 2014, going from 56 percent to 58 percent.

Indebtedness appears to be an enduring trend in higher education.

Another is the increased demand for outcome-based funding. Stateline reports that Rhode Island has recently joined the majority of states tying performance to dollars.

Over 30 states now partially—or in Tennessee’s case, almost completely—fund higher education based on metrics such as graduation rates, course completions and the share of low-income students enrolled.  States have applied these formulas only to two-year colleges, only to four-year colleges, or to all their public institutions.

The story reports that the research is mixed, but the bipartisan commitment to reining in costs and ensuring that students receive a worthwhile education remains strong. A July 2015 Stateline article explored the trend in more detail.

To get the economic benefit of a college degree, [President Obama] emphasized, students have to graduate. Fifty-nine percent of first-time college students, studying full time, who started a bachelor’s degree program in 2007 graduated in six years from that institution, according to federal statistics.

The Lumina Foundation and the Bill and Melinda Gates Foundation have added to the sense of urgency over the past few years by spending millions of dollars on developing and promoting strategies for raising graduation rates. One strategy is performance-based funding, also known as outcomes-based funding.

Washington’s community colleges featured in the story.

So far, studies haven’t found a strong link between performance funding and graduation rates. A recent analysis of Washington state’s model for community colleges found that it hadn’t much affected retention or the number of associate’s degrees awarded. Institutions were awarding more short-term certificates, credentials that don’t always have much labor market value.

The results suggest, the researchers wrote, that it may be more difficult for institutions to retain students from year to year than the designers of Washington’s formula thought. 

The difficult, of course, is not the impossible. And the effort to get it right is clearly worthwhile. Combining the articles, we can see the makings of a great story for Washington higher education: low debt and high performance. It doesn’t get better than that.