Rising debts worry students
By Jennifer Gottesfeld
Oct. 4, 2007 10:24 p.m.
Michael Gallin, a third-year international development studies student, is already feeling the burden of his student loan debts.
Gallin said he is concerned that after he graduates he will be making residence and employment decisions based on his need to make money.
“After college I need to focus on how I’m going to pay for (my debt), but how am I also going to pay for my food? My clothes? My rent?”
Statistics show that though over 18,000 UCLA students took out loans during the 2005-2006 school year, UCLA students are among the most successful in paying back their student loans. But this success might come at the cost of debt influencing post-graduation lifestyle decisions, said Richard Verches, a professor in Chicana/o studies who has worked on student financial issues.
Students’ dependence on loans because of rising of university fees may push graduates to take jobs based on salary rather than what they really want to do, Verches said.
“Raising (fees) pushes people into careers they might not have chosen otherwise,” Verches said. “They may choose private sector work instead of public sector because they need to pay off their loans. So the impact of student loans are not only on students’ immediate survival, but also on their career choices.”
UCLA has not been immune to rising costs. Over the past six years, the university’s fees have more than doubled, rising from $1,231 to $2,571 per quarter, according to UCLA Registrar archives.
Rising costs of college now exceeds the average inflationary rate, said Moshe Buchinsky, an economics professor.
“College tuition over the past two decades has risen a lot more than the consumer price index,” he said.
As a result, financial needs have been rising faster than the grant money that UCLA is able to distribute, said Chad Von Ins, UCLA Financial Aid advisor. This has caused many students to take out both federal and private loans to cover all their university and living expenses.
He noted that mid-income students are particularly affected by higher fees. While low-income students may be eligible for certain grants and high-income students are often able to afford higher fees, mid-income students need to take out both federal and private loans in order to cover their university costs, Von Ins said.
But the interest rates of private loans are often higher than the interest rates for federal loans.
“Private loans can be dangerous to get into because they don’t have caps on their interests rates like federal loans do,” Von Ins said.
Regardless of the rising university fees and high interest rates for many loans, Buchinsky said he still believes that the majority of students will not face difficulties paying their loans back.
With their education they will be able to get jobs that offer higher salaries than if they hadn’t gone to school and taken out those loans,” Buchinsky said.
Statistically, UCLA students have been successful at paying back their loans. In 2006 UCLA had a 1.5 percent default rate on student loans, as compared to the national average of 5.1 percent, according to UCLA Financial Aid statistics.
The default rate includes anyone who does not pay off their debt, either after their forbearance period ends, or because they avoid paying or disappear.
When a student receives forbearance, they are allowed to push back paying their student loans for two to four years without it affecting their credit.
Even though many UCLA students are managing to pay off their loans, Gallin said it is disconcerting to graduate with debt hanging over his head.
“I already know I’m going to be in a ton of debt for a long time,” Gallin said.
