Education In America: Paying For College As Student Loan Debt Grows

05/29/2013
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After the announcement that student loan debt had surpassed credit card debt, like most things, the conversation seemed to die down, but as many college graduates have recently been released into the wild, there are remaining issues related to college debt that they will carry with them along with the memories of their alma mater.  Furthermore, a new crop of doe-eyed freshmen are making their way into various hallowed halls of higher learning, but with costs of tuition on the rise, and in most cases annually, it’s becoming rare for the average student to be able to save and pay their tuition, and for most families, paying college costs out of pocket is simply not possible.

The Costs and How To Pay For College

College Data states that for the 2012-2013 school year the average cost for tuition and fees was $29,056 at private colleges, $8,655 for state residents at public colleges, and $21,706 for out-of-state residents attending public universities. We have seen states vote to raise tuition even when student loan debt is becoming a problem and when many students and parents are struggling financially.  Yet, some of these increases are due, in part, to funding cutbacks from state legislatures but some argue that the over-availability of loans is another reason for an increase in college costs.

While funding for education is another conversation altogether, students are being encouraged to look at financial aid from scholarships and grants, as federal aid from FAFSA may no longer meet the all of the needs of an average college student.  While the tuition and fees are one consideration, subsequent costs like books, food, or housing can bump up a student’s overall costs even if they are living on-campus in university housing.

Many a problem solver simply throw out the golden nugget of advice to “get a job” and work while in school, which isn’t a bad idea in the least, but in some college towns jobs may not always be plentiful, let alone going to offer students pay that can help them put a dent in their tuition bill or simply meet costs of living after paying their tuition.  Also, some students don’t get enough aid to pay for their basic tuition and fees, so piling on housing and book costs, among other things, can leave students seeking multiple jobs, relying on their parents if they are in a position to help, or for the majority, borrowing a student loan is the route they take.

However, proper planning is vital when it comes to paying for college, and when done correctly, it can, at worst, minimize the amount of debt a student carries after graduation and at best eliminate the need to borrow altogether.  Yet, many students are of the mind that borrowing can’t be avoided and this can be true for some, but alternatives like payment plans, offered by most colleges, can help students to stretch out their tuition and fee payments over months, and for working students or cash-strapped parents, this can make paying these increasing costs easier to bear without turning to debt.

If Loans Are Necessary, Then What?

It’s been reported that student loan profits are expected to hit $51 billion this year, which has many wondering where the disconnect is occurring.  Are colleges simply too expensive?  Are rates on student loans too high?  Many would argue that it’s a combination of these factors, among other things, that have rocketed student debt to a level where you’d be hard-pressed to find a college graduate who isn’t carrying this type of debt.

While there have been proposals to reduce student loan rates and ongoing fights to stop rates from increasing, student loan rates and refinance rates are something that potentially can add fuel to the fire as a higher rate on a loan or loans can lead to an increased cost burden, or if a monthly payment is manageable, it could still be decades before some students are able to escape their college loans.

Borrowing is a necessary evil for some, but it needs to be remembered that student loans need to be looked at from all angles.  Borrowers and parents must look at the rates of the loans, whether they are federal or private, repayment options, if interest will accrue while a student is in school, and if there are any ways to have their loans forgiven after graduation, as is the case with some educators.

Also, the hard decision of opting for a more affordable college must be made sometimes as the common rule of “don’t borrow more student debt than you plan to earn in the first year of your post-college job” isn’t something students can always abide by.  Private schools, and some public institutions, can quickly inflate a student loan bill, and while a degree from certain universities can carry a great deal of prestige, it doesn’t guarantee a job that can allow for easy repayment of student debt, nor are some degrees worth the cost of attendance.

 In cases where a heavy reliance on student loans may be necessary, financially sound students are looking at other universities that can not only offer a quality education but will not leave them swimming in a sea of student debt payment for years after they leave college.

Long-Term Consequences of Student Debt

Reports of many men and women either bypassing or delaying college are not uncommon today as many feel going into the workforce to build up a savings, which may allow them to attend college one day, is the best option in the current state of higher education. Stories about the burdens of student debt are easy to find, but some graduates are seeing friends or family who have avoided college come out ahead in terms of their financial standing.

Graduates are delaying the purchase of cars, homes, or smaller items simply because of the student loan bill that is due each month, and as many fight their interest and principal on these loans, it can be disheartening to look back a question whether it was even worth it to pursue an education.   Understandably, few college degrees lead to a six-figure income or a life of luxury, and for some that’s not even the point.  The problem is that pursuit of an education is becoming a large financial commitment, like signing a mortgage, for many young men and women today, and the players, be they state governments, the federal government, or colleges themselves are being urged to correct the underlying issues related to funding and costs.  This will require more importance being placed on education, but it’s believed that in the long run students who are able to attend college without shouldering debt may remain in school or start school earlier, since debt isn’t an issue, and offering a quality education and allowing graduates to begin a career/start life in the “real world” without the ball and chain of student debt can benefit businesses, economies, and obviously the lives of these graduates.

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