Five percent: that’s how much student-loan debt has risen in just the last year.
And with the continual increase in costs of tuition, the pressure of paying back loans is becoming overwhelming for many college students.
“Of course I’m concerned. It’s going to cost a lot of money, especially given the current economic climate. The job field I’m planning to go into is difficult, because it’s not hiring a lot of people right now,” said Ashley Collman, a Syracuse University student who plans to pursue a career in magazine journalism. Her student-loan debt: $15,000.
Nationally, outstanding student-loan debt has surpassed $1 trillion. The College Board reports:
- The average tuition at a public four-year college is $8,244, up 8.3 percent from last year.
- The average tuition at a private four-year college is $28,000, up 4.5 percent from last year.
- Nationally, the average student-loan debt for all students is $25,250.
In New York state, students are even more heavily burdened, according to the non-profit research group The Project on Student Debt. It has found the average student-loan debt is is $26,271. That makes New York the state with tenth highest amount of student-loan debt, according to The Project on Student Debt. Also in New York:
- The average cost of a public four-year college is $5,618.
- Students attending New York public colleges have an average debt of $21,710.
- The average cost of a New York state private four-year college is $30,413.
- Students attending New York private colleges have an average debt of $29,586.
Syracuse University students borrow on average $30,813 in student loans, according to SU’s financial aid office. Sixty-three percent of the students borrow $21,420 on average in federal loans.
To try to help debt-laden students, the Obama administration has recently proposed some changes to financial aid programs. The administration’s plan calls for allowing students to consolidate their federal loans to make only one monthly payment. It would also lower their payments from 15 percent of their income to 10 percent and make student borrowers eligible to have their debts forgiven in 20 years instead of 25.
The Obama administration’s plan is likely to affect only 1.6 million student-borrowers. But it gets a warm reception from Kaye DeVesty, Syracuse University’s director of financial aid.
“I think it’s a great plan. It’s a wonderful idea. The measures really do respond to the economic times. It’s a serious attempt to make federal loans manageable,” said DeVesty.
Federal education loans have additional benefits, said DeVesty. These include subsidies while people are still in school so that they don’t have to pay interest rates, deferments on repayment for those in the Peace Corps or the Armed Forces, and loan forgiveness options for teachers or some other public-service workers.
But a large portion of student debt comes from private loans, which aren’t affected by the Obama administration’s proposals for federal loans.
In New York state, non-federal student loan debt made up 30 percent of total student loan debt in the 2009 to 2010 academic year, according to CollegeInsight, a database on higher education statistics.
Help with federal loans is a good step, but not enough, said Victor Sanchez, president of the United States Students Association. The group calls for more grants and scholarships, not just relief for loans.
“The federal government needs to create more of a balance and tilt more grants and scholarships in students’ directions, not just make loans easier to pay off. The government needs to try to seek alternative forms of revenue to make this happen,” said
Sanchez.
To help manage their debt, students need to learn more about borrowing and loans, say financial aid officers.
Sharon Halpin, associate director of financial aid at Le Moyne College, urges financial literacy for students so they don’t end up defaulting or making bad repayment decisions.
“I see a lot of students who are not always making the connection between what they are borrowing and what happens later,” said Halpin. Many borrow money without thinking about how they’ll repay it, she said.
Syracuse University started a financial-literacy program 18 months ago to teach students about borrowing, according to DeVesty of the SU financial aid office. The program educates students about credit cards as well as loans.
“School costs a lot of money,” said DeVesty. “We want the students to be comfortable enough to say, ‘I’ve got to concentrate only on my studies.’”
For SU student Collman, paying off her $15,000 in loans is just something she knows she needs to make happen. “It’s certainly not something I’m going to be able to pay off in my 20’s,” said Collman. “But once I’m in a more comfortable financial position, I’ll be able to pay it back.”
(Kit Rodophele is a senior majoring in broadcast journalism.)
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