Report: Student debt dropped slightly in 2011

Are students starting to pay off their student loans? According to a report published on Jan. 17, this might be the case.

Credit Karma, a website that provides users with free credit scores, published its monthly "U.S. Credit Score Climate Report" earlier this month and some seemingly unusual statistics were revealed.

Aside from the average debt for credit cards, mortgages, home equity and auto loans, the report indicated that between December 2010 and December 2011, the national average of student loan debt decreased from $29,016 to $26,272 – a decrease of just more than 9 percent.

The report also included statistics for the state of Florida. The average amount of student loan debt in Florida was $26,672 in December 2011, down from $28,392 a year earlier.

The decrease in student loan debt counters a recent trend, said Credit Karma CEO Ken Lin in a phone interview. Lin said that student loan numbers had increased steadily over the past three years, but began to decrease over a three-month period starting in October 2011.

Some students don't see any evidence of a decrease.

"I don't know how that would be possible because I don't think people – especially people in college if you're full time – you're not usually able to work as much, and so you need help …," said Nicole Owens, a master's student in sociology.

What isn't clear from the report is whether the average student loan debt number was taken from current students, former students or both. What is clear is that current students are already being overwhelmed by student loans.

"Apart from Bright Futures, everything that needs to be paid is through loans," French education major Kristina Bean said. "So I've got a lot of money out right now, and I'm only a sophomore, and I probably have about a little over $20,000 out right now."

The data provided in the report might not be completely accurate, however. According to the press release that accompanied the report, the debt numbers in the report were based on information from more than 321,000 Credit Karma users. Because of the small sample utilized, the statistics provided in the report may be somewhat skewed.

Dr. Sean Snaith, director of the Institute for Economic Competitiveness at UCF, thinks that there is evidence of a decrease in student loan debt.

"It sounds a little counterintuitive at a time when there's a lot of bemoaning of student debt … but people are also paying down debt," Snaith said. "That's what we see happening in the wake of this recession. Student loan's a type of debt."

Lin, however, thinks that people should not look too much into this small decrease.

The debt decrease is "an anomaly instead of a data point," Lin said. Instead, Lin believes that the amount of student loan debt will increase.

One student overwhelmingly agreed that the decrease is misleading.

"I think the loan's [decrease] a false positive. I think it's going to go back up because they're [the Florida Department of Education] getting ready to cut away from Bright Futures," said senior marketing major Brennan Roberson.

Lin added that increasing tuition prices, the increasing number of adults returning to school and the surge of for-profit schools (such as the University of Phoenix and ITT Technical Institute) will cause the average student loan debt to rise again.

Regardless of whether student loan debt is actually trending downward or upward, students are still being shackled by student loans.

"It's worth it in the long run to be able to get a better job and pay them [parents] back," Bean said. "But I guess it's something I have to put up with and just I have to deal with and get through."

For more information on the Credit Karma report, please visit http://www.creditkarma.com/about/credit_climate_report_01_2012.