Updated February 18, 2013, 8:21 p.m. ET
By RUTH SIMON And ROB BARRY
Most people assume a degree in the arts is no guarantee of riches. Now there is evidence that such graduates also rack up the most student-loan debt.
A Wall Street Journal analysis of new Department of Education data shows that median debt loads at schools specializing in art, music and design average $21,576, which works out to a loan payment of about $248 a month. That is a heavy burden, considering that salaries for graduates of such schools with five or fewer years’ experience cluster around $40,000, according to PayScale.com.n
The data also show that graduates of research universities tend to carry less debt than those of liberal-arts colleges. Median debt loads average $19,445 for liberal-arts schools, versus $18,100 for research universities.
The figures are based on the amount of federal education loans in 2010-11; they include those taken out by students and their parents, but consist of only students for whom there is borrowing. That group is growing. Almost 67% of college students who graduated in 2012 had loans, up from 63% a decade ago, estimates Mark Kantrowitz, publisher of FinAid.com, a financial-aid website.
The “College Scorecard” released by the government last week offers prospective students a new way to help gauge the financial return on a college education. Families can search by school to see how much money students owe on federal student loans when they leave college, as well as estimated monthly loan payments. About 10 states, including Virginia, Florida and California, already publish salary information by school and program or are expected to do so this year.
The scorecard also includes information on graduation rates, loan defaults and average costs after grants and scholarships, all of which was previously available on a Department of Education website. That earlier site also shows the average amount students at different schools borrow in a year, but it doesn’t spell out how that debt can add up or what it will take to repay it.
Among the 4,000 colleges and universities in the federal database, the Creative Center in Omaha, Neb., a for-profit school that offers a three-year bachelor’s in fine arts, had the highest average debt load, at $52,035. Median pay for graduates of the school with five or fewer years’ experience is $31,400, according to PayScale.com.
“Salaries can be pretty darn high or pretty low” for the school’s graduates, who typically get jobs in graphic arts or advertising, said Creative Center President Ray Dotzler. “We have graduates making six figures, which we think is really good,” he adds, though “a lot of them start in the twenties.”
New York’s Manhattan School of Music had the second-highest median debt load, at $47,000. Graduates with up to five years’ experience earn an average of $42,700, according to PayScale.
“Manhattan School of Music offers world-class musical education at a reasonable price,” said interim President Marjorie Merryman. She called the government figures “misleading,” noting that typically 30% to 50% of the class borrows and class size is small, typically 65 to 90 students, meaning year-to-year figures can turn on the actions of a handful of students. Many students work abroad and take years to realize their full earnings potential, she added.
The federal data aren’t complete. Families can’t compare schools side by side or use the tool to see what kind of money people can expect to earn after graduation. Graduation rates include only first-time, full-time students. And loan figures also measure debt at the time students enter loan repayment, meaning they don’t take into account whether or not students complete college. That could understate debt loads for graduates of schools with high dropout rates.
Department of Education officials said they plan to add a comparison tool and make other revisions. The government expects to make salary information available later this year and is looking at ways to use Social Security data, Labor Department records or other information.
New York University, with a median debt of $29,260, had the highest borrowing among schools with more than 10,000 students.
“Excellence in higher education is costly,” particularly in a big city like New York, an NYU spokesman said in a statement, adding that NYU doesn’t benefit from a large per student endowment or state funding and is “upfront” about costs. The federal data “seems to be dated” and doesn’t take into account a recent decline in median borrowing, he added.
Sara Moe, a junior majoring in political science and public policy, figured she would have to take on substantial debt at NYU. “But I was hoping for five digits, not six,” said Ms. Moe, who expects to rack up more than $100,000 in loans by the time she graduates. Said Ms. Moe: “It’s important to know what you are getting yourself into.