The 18-year-old University of Wisconsin-Oshkosh student has started her higher education under a new reality where debt sometimes has the final say over where she goes and what she does.
"Oshkosh was my last choice of school, but I didn't get the financial aid I need," said Clevlend, who lives at home and works part time to limit her need to borrow.
"I'm looking beyond college," she said.
Total student loan debt now exceeds total credit card debt in this country, according to Mark Kantrowitz, publisher of FinAid.org, a website that provides information about student aid and scholarships.
College graduates owe more than $850 billion in student loans, according to FinAid.org. The Federal Reserve estimates Americans owe about $828 billion in revolving credit, including credit card debt.
The change, which first happened in June, reflects the culmination of multiple trends: Consumers are paying down their credit cards, more students are going to college than ever and tuition continues to outpace financial aid.
"We have students who are living off their loans. When you get to that point, it's no wonder students are having to borrow the maximum," said Beatriz Contreras, director of financial aid at UWO. "That was not the intention of financial aid when it was started."
Loan critics say the ballooning rate of student borrowing has been largely overlooked while people focused on problems associated with credit card use.
"Like everything that I've been shouting for the past five years, no one really listened. The people who you would think would be up in arms were just not there," said Alan Collinge, who runs a Web site called StudentLoanJustice.org, where students can share stories about loan troubles.
Even some students don't know how much they owe.
"I guess it doesn't really bother me too much at this time," said William Durfee, 21, a math major at the University of Wisconsin-Oshkosh. He said he knows he borrowed in the range of $6,000 to $7,000 for the current semester, and he's taken similar sized loans for three previous years of college.
The way he sees it, "I'm going to find a higher paying job after finishing school, and that will help to pay it off," he said.
That sentiment has been echoed for years: Hard work in school should pay off with a college diploma and a good job.
A 2010 report from the College Board Advocacy and Policy Center estimates college begins to pay off for the average graduate by age 33. Compared with a high school graduate, the typical four-year college graduate who enrolled in a public university at age 18 has earned enough by then to compensate for being out of the labor force for four years and for borrowing enough to pay tuition and fees without grant aid.
But American's may have crossed a line where borrowing for school does more harm than good.
The number of students defaulting on their loans has been rising since 2003. According to the most recent federal Department of Education figures, 7 percent of students defaulted in 2008.
That number could be even worse. The Chronicle of Higher Education reported in July that one in every five government loans that entered repayment since 1995 went into default.
UWO Chancellor Richard Wells said responsibility for reducing student debt lies on everyone's shoulders. He said university officials must control costs, governments should reasonably subsidize higher education and students must work hard to graduate on time.
"It challenges us all in fundamental ways if we intend to improve the educational experience and control the costs," he said.
Contreras said she advises students to learn as much as they can about their loans to avoid problems, and she suggests families begin planning years in advance by saving money and pursuing scholarships to minimize the need to borrow.
"Awareness, awareness, awareness. Ask questions, and it's never too early to look into this," she said.
No comments:
Post a Comment