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Commencement 2012: Aggies have less debt than national average

April 29th, 2012 Posted in Opinion

By Kristi Ottley

LOGAN—Graduation from college is an exciting time for most seniors as they celebrate their accomplishments and prepare for what they hope is a bright and successful future.

But not all college students get to bask in the joy of completing their education and moving on with their lives as fully as others do. These are students who are graduating with the harsh reality that they will have to start repaying their student loans in the very near future.

“Student loans are a necessary evil,” said USU alum Josh Greer. Without the option of borrowing money from the government and other private lenders, many students would simply not be able to pay for a higher education.

Greer graduated with a degree in public health in 2006. Six years later, he is still paying on the loans that made college a possibility for him. “I had no other options for paying for my education,” said Greer. “My family was in no position to help me financially and the small grants I received barely put a dent in the cost of tuition.”

Greer is not alone. USU Financial Aid Director Steve Sharp says 43 percent of USU students took out loans this school year. USU awarded close to $150 million in total student aid in 2011-2012, Sharp pointed out, including grants, scholarships and $57 million in student loans.

“The cost of education has gone up and scholarships and grants are not keeping up with the increases, so more students are having to borrow now than in the past,” he said. With the economy continuing to struggle, more people are going back to school, which helps explain part of the increase in student indebtedness, Sharp said.

Indeed, for the first time, U.S. student loan debt now exceeds the total amount Americans owe on credit cards, according to government and media reports. USA Today reported last fall that U.S. college students took out more than $100 billion in loans last year, and that the total student loan debt exceeded $1 trillion.

Project on Student Debt

The good news, however, is that although students at USU depend more and more on loans for their education, the amount they have to borrow is much less than the national average.

The average Aggie graduates with $17,000 in student debt, compared to the national average of more than $25,000; New Hampshire students graduate with the most average debt—$31,000.

Sharp says there are two main reasons why USU students borrow less and are less in debt upon graduation than other U.S. college students. The first is that USU’s tuition is significantly less than other schools: the College Board says average in-state tuition last year at four-year public universities was $8,244, reported USA Today, but USU’s in-state tuition for next year will be less than half that—$2,510 (plus fees), says the USU Registrar’s office.

Among USU’s 20 peer institutions in the West, Aggie tuition is next-to-lowest; only the University of Wyoming, with its huge gas and oil boom that supports the state economy, charges less in tuition than Utah State, according to USU data.

State-by-state student debt data & map.

USU students also borrow less because more of them are married and self-supporting, qualifying them for low-income grants, Sharp said.

Sharp said loans are not all bad, and can actually be seen as an investment if students are wise about their borrowing and spending. College graduates will earn significantly more over their careers than people without a degree, and taking out loans may be the only way to do that.

“A student loan, if it is done well, is an investment,” said Sharp. “You are borrowing money that you intend to pay back through higher earnings.”

• National Public Radio: President Obama, Congress, fight over student loan interest rates

For Greer, his public health bachelor’s degree was essential to starting a career.

“My job requires a college degree,” he said. “In the long run, taking out loans to pay my tuition and other expenses during college was worth it.

“Without my degree I would not have my current job,” he said. “I just hate how much I am paying in interest.” Greer, who is on a 20-year repayment plan, says he should be able to have his loans paid in full about five years early, which will save him significant amounts of interest.

For graduating senior and print journalism major Candice Sandness, taking out student loans was the best option for her and made it possible for her to be graduating this year.

“I didn’t want to be in school forever, so to graduate within five years, I decided to take out loans to help me graduate on time,” she said. “I could focus more on getting good grades instead of stressing about money for food and rent.”

The prospect of repaying student loans can be terrifying and overwhelming for many new graduates, but it doesn’t need to be, said Sharp. There are many repayment options for students to choose from, and students generally have a six-month grace period after graduation the repayment schedule starts, giving new grads time to find a job and figure out their finances.

One repayment option Sharp says is beneficial for many students is the income-contingent option. With this plan, payments are determined based on income. As income increases, the payments increase. The balance can even be forgiven if the loan has not been repaid in 25 years, but at that point it becomes taxable income, Sharp said.

“Student loans are a serious commitment and should not be taken lightly,” he said.

With all the different repayment options available students should be able to find one that will work for them and prevent making the mistake of defaulting, said Sharp. It is important for students to look at their finances and not take out more in loans than is necessary, so when repayment is upon them they can have as small amount as possible to pay back, said Sharp.

Overall, USU students have proven to be very smart in their borrowing. Most do whatever they can to prevent taking out large amounts in student loans, said Sharp. Only about 4 percent of USU graduates default on loans in the first three years of repayment, compared to a near 10 percent national average.

“There are always ways to pay,” said Sharp. “A student should never default on their loan. With all the options, specifically income contingent, there is never an excuse not to pay.”

Sharp warned new graduates to take their obligations serious. “Should you make the mistake of defaulting, [lenders] will come after you,” he said. “They can garnish your wages and tax refunds to get the money you owe.”

Greer, who worked all through college as a manager at a local fast food restaurant, emphasized the importance of doing everything possible to help pay for your education before taking out loans. “They have to be repaid, and it can take a long time to do so,” he said. “If you can prevent taking out loans to pay for your tuition do so, but if you have to borrow money be smart about it, and don’t take more than you need.”

Sandness was very careful when she decided she needed to take out student loans, and says she is well prepared to pay hers back quickly. “I just need to set aside $110 a month for my student loans for five years,” she said. “I wasn’t worried because I knew as long as I had a full-time job I would be able to pay my student loans.”


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