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A four-year course in crushing debt

By TIMES EDITORIALS
Published August 12, 2006

Four years ago, as a soon-to-be college freshman, I sat hunched over mountains of brochures and financial aid applications and agonized over the numbers. I longed to enter a small liberal arts school with a close-knit community, but the price tag complicated everything.

I finally decided to attend a state university instead, and my family said they could support me. But I am one of a fortunate few who experienced such an easy financial transition to college and expect to graduate debt-free. Only a focused collaborative effort from universities and lenders will enable more students to do the same.

Rising interest rates on student loans combined with rising tuition and lagging financial aid make it difficult for bright young minds to secure their financial future. I know one 34-year-old single mother who ditched her coffee shop job to pursue a college degree at St. Petersburg College four years ago. During this time her loans have totalled $18,000. As she nears the finish line at the University of Tampa, she is unsure how much she will owe the government in the end and is crossing her fingers in hopes that she will find a well-paying job. But students should not have to rely on luck to cope with such unexpected rate changes.

Last year, a new Parent Loan for Undergraduate Students (PLUS) carried a 6.1 percent interest rate. On July 1, it climbed to 7.94 percent. New Stafford loans, the most common loan for students, carried an interest rate of 4.7 percent while the student was in school and 5.3 percent during the repayment period. If the loan recipient did not consolidate by June 30, the interest rate is now 7.14 percent.

Any Stafford or PLUS loans taken out today will have a fixed interest rate of 6.8 percent and 8.5 percent, respectively. If the government believes in providing everyone with opportunities for postsecondary study, why put such a burden on students?

There are alternatives to increasing interest rates, but it takes creative teamwork from the government, colleges and lenders. Take the University of North Carolina, whose Carolina Covenant program allows students whose families live on the poverty line to graduate debt-free. Flagship institutions in Virginia, Maryland and Nebraska have similar initiatives. But schools do not have the resources to cover everyone's bills, and middle class students often are hurt the most by rising tuition since they qualify for more loans than grants or scholarships.

Postsecondary price tags will continue to rise. But with a greater commitment to education from the government, the majority of students could one day walk away with their diplomas feeling confident, not cornered.

[Last modified August 12, 2006, 02:10:25]