Students Borrowing Dramatically More to Pay for College

[phuriku]

<p>[Student</a> Debt Grows Dramatically - WSJ.com](<a href=“http://online.wsj.com/article/SB10001424052970204731804574388682129316614.html]Student”>http://online.wsj.com/article/SB10001424052970204731804574388682129316614.html)</p>

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New numbers from the U.S. Education Department show that federal student-loan disbursements—the total amount borrowed by students and received by schools—in the 2008-09 academic year grew about 25% over the previous year, to $75.1 billion. The amount of money students borrow has long been on the rise. But last year far surpassed past increases, which ranged from as low as 1.7% in the 1998-99 school year to almost 17% in 1994-95, according to figures used in President Barack Obama’s proposed 2010 budget.

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The new numbers highlight how debt has become commonplace in paying for higher education. Today, two-thirds of college students borrow to pay for college, and their average debt load is $23,186 by the time they graduate, according to an analysis of the government’s National Postsecondary Student Aid Study, conducted by financial-aid expert Mark Kantrowitz. Only a dozen years earlier, according to the study, 58% of students borrowed to pay for college, and the average amount borrowed was $13,172.

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[chaospaladin]

<p>Thanks for the article.</p>

[mom6350]

<p>I liked this section of the article:</p>

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Also, the rising levels of borrowing may ironically be contributing to the accelerating cost of college, say some college-finance experts. Loans can give colleges an artificial sense of a family’s ability to pay tuition. To some extent, that false sense of security gets built into the assumptions schools make when setting prices, say experts. The idea is that as prices rise, families borrow more and more, spurring prices to rise further, which in turn requires more borrowing. Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, says this phenomenon is playing a role in why tuition grows at about twice the rate of inflation. “Instead of imposing tougher choices” on college costs, he says, it’s “easier to raise prices…because this additional loan amount is made available.”

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<p>I cringe every time I hear that the government might raise the loan limits for students because the colleges will just assume that the students will take out the larger loans and give less institutional aid. It definitely takes the pressure off of them on raising prices. </p>

<p>I am really hoping that the slow economy means that price increases will level to a more reasonable amount. Wishful thinking probably…</p>

[speedo]

<p>I agree, raising loan limits as the gov did a year or so ago, does little for
most students or families. I also think that the average debt quoted in the
article is actually going to be much higher for kids just starting college.
4 years from now the average debt for borrowers coming out of undergrad
is going to be around $30,000.</p>

[proud_mom_2]

<p>Personally, I think a lot of kids are taking on needless debt because they choose going to a more expensive out-of-state or private school instead of a lesser expensive and many time just as good, if not better, public school. I know of a kid who will owe over $60,000 (more likely over $70,000) in debt for a BS in Engineering from Mercer in GA when he had a choice to go to UF. With his 100% Bright Future’s scholarship, he only would have had room and board and a few misc. expenses. Personally, I think the degree from UF would do him better than Mercer. What I find (I am a high school teacher who talks with a lot of juniors and seniors) is that many privates give scholarships for half of the costs and that can look impressive, but many times when you factor in how much the other half can cost you, it isn’t so impressive.</p>

[proud_mom_2]

<p>I know of another kid who decided to go to Purdue without any scholarships instead of UF, or another state college with 100% Bright Future’s scholarship, but was advised by his mother to “follow his dream.” His entire education is being paid for with loans as his parents are not in the position to pay for it. He did become a state resident after his first year to change his tuition costs from out-of-state to in-state, but it is still a lot more than he would have paid if he had stayed in-state. Basically, I think parents should be more responsible in advising their children about college debt. A huge debt can severally hinder a young person from following their dreams after college.</p>

[sax]

<p>[Student</a> Loans: Default Rates Are Soaring - WSJ.com](<a href=“http://online.wsj.com/article/SB124027600001437467.html]Student”>http://online.wsj.com/article/SB124027600001437467.html)</p>

<p>an article on loan defaults; read the comments section too.</p>

[juillet]

<p>When I first entered my alma mater in 2004, the tuition was a bit over $11,000 for the year. I checked the tuition rates a couple of weeks ago and it’s currently $17,000+! $6,000 in 5 years. And they are wondering why their students, who have some of the highest Pell grant eligibility rates, can’t afford to pay their tuition.</p>

<p>Following your dreams and going to your “perfect” college sounds like a really great idea when you’re 18 and misty-eyed at the thought of going to college, but it’s a totally different story when you’re a couple years out, making between $30-50K a year (because the college grad is rare that makes more than that their first couple years), and are struggling to pay back tens of thousands in debt. And that’s only if a student isn’t planning to go to medical school or law school, which only piles on the debt. Students who are planning professional school (or are planning careers in lower-paid industries) should definitely take that into consideration and use the loan calculators on places like Finaid.org before blindly taking whatever loan money someone hands them. College is really more of what you make it, and it might be better in the long run to graduate with less debt.</p>