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What’s driving up student debt?

By Crissinda Ponder · Bankrate.com
Friday, November 16, 2012
Posted: 11 am ET

We've heard it before -- student debt has surpassed $1 trillion. But what's to blame for this growing number of outstanding loan balances?

Tuition, many say.

Yes, but tuition isn't the sole culprit.

According to a recent study, "The Role of Tuition, Financial Aid Policies, and Student Outcomes on Average Student Debt," by Jim Monks, associate professor of economics at the University of Richmond, while cost of attendance does play a significant role, several other factors, including admissions and financial aid policies, are also important in determining student debt levels.

Public universities classified as need-blind institutions, which typically enroll more low-income students, have a higher average of student debt upon graduation -- 48 percent. Additionally, public schools with higher average SAT scores have lower levels of student debt.

For private institutions that meet full need -- meaning that grants, loans or work-study programs are used to meet the difference between the tuition, room and board of an institution and what a student's family is expected to pay -- average student debt is 18 percent lower than private schools that do not meet full need.

The study concludes that higher education policy advocates should not only focus on rising tuition levels to eradicate the student debt crisis, but on policies that affect net price and encourage students to enter fields with an adequate return on investment.

What other factors do you think have an impact on student debt?

Follow me on Twitter @CrissiPonder.

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