Students across America are borrowing more than ever before, a trend that will likely have long-term affects for an entire generation.
With some colleges and universities costing over $50,000 a year, families and students are pressured to take out loans to pay for the rapidly growing expenses. The total amount borrowed by students and families in the 2008-2009 year reached $75.1 billion, according to the U.S. Deparment of Education, up more than 25 percent in the last year. Though more than expected, the rise in student debt has been growing for more than a decade.
These numbers just further show how common it has become for students to rely on loans to help pay for education. With two-thirds of college students borrowing to pay for college, the average debt loan has reached $23,186 by the time they graduate, according to the Department of Education.
The types of loans taken out by college attendees are one of two choices; federal direct loans or private loans.
Federal direct loans are those provided by the Department of Education. Acting as a lender, the federal government provides funds through Stafford loans and PLUS loans. These loans allow the student to choose which school and choice of study is most appropriate.
Private loans are loans provided by loan lenders such as Sallie Mae and My Rich Uncle. These loans can be used not only to pay for tuition but also for living fees. These loans also come with higher interest fees and are less available after the financial crisis.
Living in a sunken economy, many are unsure as to how they will pay for college. Some feel pressured to turn to high interest rate, risky private loans. In effort to prevent this, President Obama’s Administration has raised the Stafford loans limit to $31,000, which happens to be $8,000 more than the previous year. While this may prevent students from graduating because of the burden of risky loans, this generation is still facing thousands of dollars worth of debt to pay off.
Ashley Allen, a junior and creative writing major at Hollins University has over $52,000 in loans to pay off after graduation and worries about the job market.
“It’s hard enough to find a job in this economy, let alone a job that will allow me pay for rent, food and my loans plus interest,“ Allen said.
Michelle Williams can be reached at [email protected].
