Student Loan Debt Keeps Rising

Cross-posted on Prosperity Watch

Since the start of the Great Recession, household incomes have failed to keep pace with the rising cost of attending college and associated living expenses, including rent, transportation and utilities. Tuition increases, which have been in response to steep State budget cuts to higher education, have outpaced inflation and increases in financial aid. The result: students are relying more heavily on student loans, including private loans with higher interest rates.

During the 2007-08 school year to 2009-10 school year, in-state tuition at a public four-year college in North Carolina increased approximately 5 percent. Yet, the average debt for graduating seniors who attend a public four-year college in North Carolina increased 20.5 percent during this time period (see the chart below). Recent UNC System-approved tuition hikes will likely translate into an uptick in students’ reliance on borrowed money.

Financial constraints may lead some low- and moderate-income students to work long hours while earning a degree. A 2009 study found that the optimal study-work balance for a full-time student is part-time employment of less than 15 hours per week. Working more than 15 hours per week puts a full-time student at risk of dropping out.

 

2 Comments

  1. Emily Morgan

    December 14, 2011 at 3:42 am

    It’s good that this subject gets some press. I find that people drastically underestimate the cost of a private school undergraduate education. Without proper financial counseling and planning for both the student and parents, poor planning can lead to a massive amount of debt. I attended a private university in Boston, and because of my parents’ financial situations, took out private loans for all 5 years (it is a 5-year program). I received some scholarship and worked during school, but graduated with a 3.6 GPA and over $170K in loans! Lucky enough to find a job and afford my $1400/month payments, I soon grasped what insane prices colleges charge for a degree, and how not planning can lead to enormous debt. I have a good job and am making payments, but the gravity of owing over $150K is just mind-numbing. There is a great need for colleges to make their programs more affordable, and for financial aid officers and families to be aware of the costs of a private education. So, if you are going to enter a college, be ready to apply for additional payday loans online to make payments on your student loans.

  2. Susan

    December 15, 2011 at 12:25 am

    I’m really concerned for my nieces and nephew because they are a few years from college and I don’t think they really know what they are facing! I don’t want them to be like me paying back loans for the next decade (and i’m lucky!)