Over the past week media outlets have reported that student loan debt exceeds $1 trillion. That’s more than what is owed nationally for credit cards or auto loans.
Many commentators have suggested that student loan debt is likely to be the next financial crisis confronting the country, perhaps even threatening nascent economic recovery. Nationally, average student loan debt has risen more than 25 percent to $25,000 in the past 10 years. The good news in Georgia is that the average here is more modest but still challenging. It’s $19,000, seventh lowest among the 50 states.
The reason is not a mystery; it’s a function of the dramatic increase in the cost of going to college. For example, over the past 10 years the average tuition rate within the University System of Georgia has gone up by some 130 percent. Over that same time period, the increase in the consumer price index has risen by just over 27 percent.
In fairness, it should be pointed out that much of the increase has been driven by cuts to state funds that help support the USG. Regardless, the reality is that affordability has become a major concern on college campuses across our state. Talk to any college president and it is likely he or she will cite inadequate financial resources as the No. 1 reason students fail to complete their degrees. So students are likely to continue to borrow. There are ways to mitigate the burden of a student loan. Consider the following before signing a promissory note:
● Become a better-informed consumer. Research colleges and attendance costs. There are a lot of choices. Information can be found at our website, GAcollege411.org.
● When considering a particular school, talk to someone in the financial aid office or admissions about scholarships and grants.
● Look for grant and scholarship opportunities at websites such as the collegeboard.org or fastweb.com.
● To reduce costs, and thus the need to borrow, enroll in a lower-tuition school for the first two years. Then transfer to your first-choice, higher-tuition school.
● When in college, stay focused on the goal of graduating. Minimize taking unnecessary courses.
● Try to complete your degree in four years. The less time spent attending college, the less money spent on expenses such as rent and school fees.
● Do not borrow merely to support a lifestyle that’s not necessary. Whatever you borrow now must be repaid over years to come.
● Find a part-time job. You can work 20 hours a week and still be a full-time student.
● Too often we try to help former students who are struggling with loans and repayments out of proportion to what the student is likely to earn upon graduation. If you have to borrow, borrow the least amount necessary.
Tim Connell is president of the Georgia Student Finance Commission.
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