Email This StoryStudents incur loans as quick college fix
April 27, 2005By Katie Hornstrom
Reporter
College students are facing the rising costs of education, and, for many, student loans are the answer.
"The issue of incurring debt while in school is a fairly new phenomenon in American education," Dr. Kent Gilbreath, professor of economics, said.
College debt was a foreign concept 40 years ago. Most students had jobs that could pay for their education. The federal government then created programs to help low-income students afford college. According to Gilbreath, as borrowing money for school became easier, universities became "less reluctant" to raise tuition and pass on the increasing high cost of education to students.
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Almost every student now receives some sort of aid for school, whether through loans or other assistance.
"I had to take out loans for living expenses, books, student fees, all the little things you pay for in college, even though I didn't get charged for tuition," Alexia Geary, a Baylor graduate, said.
Many universities use the Free Application for Federal Student Aid, or FAFSA, for financial information to consider aid for the students. According to Baylor's Office of Academic Scholarships and Financial Aid records, 53 percent of the students who graduated in the 2003-2004 school year had some kind of loan debt, and the average loan debt was about $27,200.
"We encourage all students to complete the FAFSA because we have other scholarships and aid available, but without the FAFSA we really don't know where [students] stand," Cliff Neel, assistant vice president and director of academic scholarships and financial aid, said.
Students should also be aware of where they spend their money.
Loan money must be repaid, and students sometimes get into the habit of spending money on items unrelated to school.
"This is not money for going out on spring break or purchasing big-screen TVs or things like that," Neel said.
Neel encourages students to borrow as little as possible and to buy things strictly for their education -- such as books, supplies or housing.
While in school, Neel also suggests students explore options for scholarships and grants.
"I thought about my debt a little bit while in school, but I know now that I didn't think about it enough," Geary said.
Graduating on time can also relieve financial burden. Student aid from federal funds does have a limit. According to Neel, students in their fifth and sixth year of college sometimes reach that limit.
Under the financial aid section on Bearweb, there are numerous links to Web sites to find scholarships and help track your student loan debt.
Two links in particular deal with debt -- the National Student Loan Data System (NSLDS) and the Electronic Loan Management system (ELM).
The Federal Stafford and Perkins loans are on the NSLDS, while the ELM system shows the Stafford loan and the alternative loans.
Some graduates aren't struggling with loans in their lives after Baylor.
Michael Boswell, a Baylor graduate, isn't finding life after college so difficult. Boswell has about the Baylor average in student loan debt and said he expects to pay off the loans in five years.
"I actually decided to pay off my loans faster, and every month I try to pay more than the minimum payment," Boswell said.
Boswell took his current job to begin paying off his debt while he decided on a career to pursue. Boswell was unable to consolidate his loans, but he said his monthly payments aren't unmanageable.
"I manage to live comfortably, and I recently purchased a new car," Boswell said.
According to Gilbreath, students who graduate don't usually have a major problem paying back loans.
Problems do arise, however, when a student drops out of school, whether for financial, academic or family reasons.
These students were counting on having a job with a salary to support the weight of a loan and instead are faced with debt and no degree to get that higher- paying job.
Another problem students face is entering a career field where there are fewer job opportunities or a salary to low to support paying off debts.
"To me, it makes very little sense for a person who wants to be a public school teacher to attend a private school because the salaries that public school teachers receive just cannot justify the incurrence of high levels of debt that might be associated with attending a private university," Gilbreath said.
Gilbreath said he believes private schools may be moving away from training certain low-paying fields as the trend of debt increases.
There may also be a trend for students to increasingly base their school and major choices on their financial situation.
"As students and their families become informed on the consequences of debt, we will see students more carefully selecting the college they go to that charges tuition compatible with the kinds of jobs they do," Gilbreath said.
Increasing tuition will also affect the types of fields students are choosing.
Lower-income students are gravitating to careers in business, medicine, law and engineering, where there is the opportunity to make considerably more money than majors in the humanities.
Students coming from wealthy families don't have debt concerns and are able to choose majors based on their interests rather than the concern of income after graduation.
"It's a very complex economic issue," Gilbreath said.
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