Baird’s Susie Bauer Discusses Rising Student Loan Debt, Challenges Facing College-Bound Students and Families

MILWAUKEE, April 21, 2014

Susie BauerAs many graduating seniors grapple with the tough decision of selecting a college, Susie Bauer, 529 Plan Manager for Baird’s Private Wealth Management group, cautions them to keep their financial future in mind. “While most parents and students want to invest in the best education they can, it’s important to keep in mind that student loan debt can have a significant impact on a young person’s future financial health,” she said.

How families pay for college
According to Bauer, the economic downturn has impacted how much families contribute toward a child’s education. Since 2010, families have reduced how much they spend on college, with parents’ contributions in particular seeing a significant decline from 47% in 2010 down to 36% in 2013. The use of grants and scholarships, now the largest contributor, and student borrowing has increased to fill the gap.

According to Bauer, “529 college savings plans are starting to play a bigger role in funding a college education.” In 2013, the use of college savings plans increased to its highest level ever with plans being used to cover 7% of total costs of college. In fact, 17% percent of families used 529 plans to pay for college in 2013, more than in any previous year.1

While the number of students who borrow to pay for college was down slightly in 2013, those who did borrow took out larger loans than in the past. In 2013, 85% of parents felt strongly that college was an investment in their child’s future. And, more than half of the families felt they would rather borrow to pay for college than have their child not go at all. While many families expressed a willingness to stretch financially to help their child earn a college degree, more than half worried their funds would run out before their child completed college.

Rising student debt levels
The Project On Student Loan Debt’s report, Student Debt and the Class of 2012, said that 7 in 10 college seniors (71%) who graduated in 2012 had student loan debt, with an average of $29,400 per borrower. From 2008 to 2012, debt at graduation (federal and private loans combined) increased an average of 6% each year. The report includes an interactive chart with the 2012 average debt levels for the 50 states and District of Columbia and for more than 1,000 U.S. colleges and universities.2

“Society as a whole is impacted by the student loan burden,” Bauer said. “Young adults today are increasingly opting not to pursue their desired career paths, which may include a less lucrative position in the public sector or starting their own business; delaying buying their first home; putting off getting married and starting a family; and deferring saving for retirement.” Consider these statistics from a survey by American Student Assistance (ASA), a nonprofit organization that helps students and families manage higher education debt: 3

  • 27% of respondents said they found it difficult to buy daily necessities because of their student loans;
  • 63% said their debt affected their ability to make large purchases, such as a car;
  • 73% said they have put off saving for retirement or making other investments; and
  • 75% – the vast majority – indicated that student loan debt affected their decision or ability to purchase a home.

Survey respondents indicated that in addition to limiting their ability to make major purchases, student loan debt also impacts important life decisions:

  • 30% responded that their student loan debt was the deciding factor, or had considerable impact, on their choice of career field;
  • 47% indicated it was the deciding factor, or had considerable impact, on their decision or ability to start a small business;
  • 29% indicated they have put off marriage as a result of their student loans;
  • 43% said student debt has delayed their decision to start a family.

Bauer shared some other important statistics on student debt levels from the College Board’s Trends in Student Aid 2013: 4

  • The percentage of undergraduate students taking private education loans declined from 14% in 2007‑08 to 6% in 2011-12.
  • Dependent students with 2010 family incomes between $65,000 and $105,999 were more likely than those from either less affluent or more affluent families to take private student loans in 2011-12. The 57% of public four-year college bachelor’s degree recipients who graduated with debt in 2011-12 borrowed an average of $25,000.
  • The 65% of private nonprofit four-year college bachelor’s degree recipients who graduated with debt in 2011-12 borrowed an average of $29,900.
  • In 2012, 40% of borrowers with education debt owed less than $10,000 and another 30% owed between $10,000 and $25,000; 4% of borrowers owed $100,000 or more. This debt includes funds borrowed for both undergraduate and graduate studies.
  • The frequently cited $1 trillion student debt figure refers to estimates of the outstanding value of education loan debt. This is the amount that students and parents have borrowed over time, but have not yet repaid. It includes accrued interest and other charges as well as loans not yet in repayment.

Discuss alternatives
Bauer encourages families to consider other ways to reduce college costs to avoid debt. “Attending a less expensive community college for a year or two and living at home can reduce the overall cost of college significantly,” she said. “Students can then finish their degree at – and graduate from – their desired college.”

Bauer encourages students who find they must assume debt to seek federal loans and avoid private student loans. “Private student loans are one of the riskiest ways to finance a college education. You would almost be better off using a credit card. Private loans typically have variable interest rates that are higher for those who can least afford them – as high as 18% in 2008,” Bauer said. “But unlike credit card debt, these loans are nearly impossible to discharge in bankruptcy. And private student loan borrowers are not eligible for the important benefits that come with federal student loans such as deferment, income-based repayment or loan forgiveness options.”

“Statistics on Student Education Debt” summarizes recent research on how families are paying for college and the broader impact of student loan debt. To schedule an interview with Susie Bauer on this or related topics, contact Amy Nutter, Baird Public Relations, at (414) 765-3988 or

About Susie Bauer
Susie Bauer is the 529/UIT Manager for Baird, where she has worked in UIT marketing since 1997 and 529 plan marketing since 2000. Additionally, she is a trainer, and conducts e-learning sessions and educational presentations for Baird associates. Susie serves as chair of the Securities Industry & Financial Markets Association’s (SIFMA) 529 Working Group. Susie earned a bachelor of fine arts degree from the University of Wisconsin-Milwaukee and a Master of Arts degree from the University of Illinois in Champaign-Urbana.

About Baird
Baird is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. Established in 1919, Baird has more than 2,900 associates serving the needs of individual, corporate, institutional and municipal clients. Baird has more than $100 billion in client assets. Committed to being a great place to work, Baird ranked No. 9 on FORTUNE’s 100 Best Companies to Work For in 2014 – its 11th consecutive year on the list. Baird’s principal operating subsidiaries are Robert W. Baird & Co. in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s investment banking and private equity operations. For more information, please visit Baird’s Web site at

For additional information, contact:
Amy Nutter
Baird Public Relations
(414) 765-3988


1Sallie Mae, How America Pays for College 2013

2The Project On Student Loan Debt, Student Debt and the Class of 2012

3American Student Assistance, Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans

4College Board, Trends in Student Aid 2013