Column by Amber Roerick
Loans, federal aid and debt – oh my! According to a national bipartisan survey of adults ages 18-34, young adults today believe a college education is more important than it was for their parents’ generation. Now that seems like a reasonable judgment, right? What with the high prices of gas, housing and even groceries, things have changed quite a bit since the Baby Boomer Era. Students today have noticed an enormous change in their bank accounts; they have begun to shrink.
College has become increasingly more expensive in the last five years, and students are leaving school with too much debt. Even since 1978, according to an article on the website Takepart, college tuition has gone up by 900 percent – five times the pace of inflation and twice the pace of health-care costs. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York and the U.S. Department of Education. The amount of student loans taken out in 2010 crossed the $100 billion mark for the first time and total loans outstanding even exceeded $1 trillion for the first time in 2011.
So, what does this mean? Well, for those students in college and even parents whose kids are in college, this means not only a long trail of student debt to be paid off but also the delay of many of life’s luxuries including a car, a nice home and even a marriage and kids. Although student debt can be reduced with the help of scholarships and awards, for students who attend the College of St. Benedict in St.Joseph, the cost per year can exceed $46,488, and that amount doesn’t even include personal expenses!
With all of this debt piling up, the question remains: Why is college so expensive? There are two major factors that have led to the rising costs of college. First, the portion of borrowers in default, or people who are more than nine months behind on payments, rose from 6.7 percent in 2007 to 8.8 percent in 2009, according to the most recent federal data. Also, the highest default rates are at for-profit schools that tend to serve lower-income students and offer courses online. The University of Phoenix, for example, is the nation’s largest, and received 88 percent of its revenue from federal programs last year, most of it from student loans.
So, how can Americans, especially students in college and parents who have kids in college, pay the enormous amount of debt they acquire? According to a report based on a national survey of 684 undergraduate students and 720 parents of undergraduates in the 2007-2008 academic year, major contributors to paying off college debt included parents’ income and savings, student borrowing, parent borrowing, grants and scholarships, student income and savings, and support from friends and relatives. Looking at those contributions, it looks as if paying off student debt would be a breeze. However, the time it takes to pay off college costs can take as long as 25 years or more.
The big picture is that student debt is quickly becoming a financial crisis of its own, causing more and more students to become discouraged from even attending college. If something is not done to decrease the costs of college, attendance at many universities will decrease, and college will not be affordable for even middle-class Americans.
Now that many Americans can see student debt has piled so high that even credit cards cannot reach the top of the stack, it is important to start saving now. College isn’t getting any cheaper, and it is for certain to get a lot more expensive.