Project on Student Debt publishes study that shows that debt is on the rise
By Cristina Chang
Jan. 3, 2010 11:44 p.m.
Two-thirds of college seniors graduated with debt in 2008, facing an average of $23,200 of debt that has grown at a rate of about 6 percent a year since 2004.
These are the findings of a December report by the Project on Student Debt titled “Student Debt and the Class of 2008,” the group’s annual report of nationwide student debt.
What students can expect in terms of debt varies tremendously, said Lauren Asher, president of the Institute for College Access and Success, which is the home of The Project on Student Debt.
In 2007-2008, the average UCLA student left college with about $16,200 in debt, said Ronald Johnson, director of the UCLA financial aid office.
However, he added that the amount is probably closer to between $18,000 and $20,000 for those graduating in the 2008-2009 year and would probably go up to between $23,000 and $25,000 for 2011-2012.
Johnson responded to fears that the recent 32 percent student fee increase will lead students further into debt.
Students whose families make less than $60,000, however, will not be affected by the hike for up to four years, as part of the Blue and Gold Opportunity Plan. Those making between $60,000 and $100,000 will only pay half the increase, he added.
Johnson conceded that the plan is not a panacea for families but he added that this will aid some students from borrowing a higher amount, provided they file on time for financial aid.
He urged students to seek as many forms of financial aid as possible.
For instance, families of married couples with incomes of up to $180,000 ($90,000 cap for single filers) can ask for the American Opportunity Credit, which provide families up to $2,500 dollars in relief from their taxes.
The debt average California college students graduate with is the 43rd highest in the nation, with 48 percent graduating with debt, facing an average of $17,000, Asher said.
“California has a long tradition, currently under threat, of keeping higher education coverage,” she said. “It has in the past covered a large number of college students and a large majority (of students) go to public institutions.”
She added that California also has the Cal Grant program, which is a larger and more generous state aid program than many other states.
More borrowing is likely to continue, compounded by the economic crisis, Asher said. Recent graduates are not helped by the fact that unemployment among 20-24 year olds with bachelor’s degrees was 10.6 percent during the third quarter of 2009, she added.
Patricia Nash Christel, a spokesperson for Sallie Mae, a private student loan company, said in an e-mail that the company advises families to follow the “1-2-3 approach.”
She said students should start by searching for scholarships and grants and using their income and savings. Then, if a need to borrow persists, students should look into federal student loans first. If the first two options aren’t enough to cover all expenses, she advises applying to a “pay-interest-as-you-go private education loan.”
Asher said she finds the increasing debt burden on students problematic.
“There’s no question that a well-educated workforce is good for the state as a whole, which translates into greater civic participation and higher earning and tax returns,” she said.
