“By the time I graduate, I’ll owe thousands,” says Alma Vidovic, who started at the U three years ago on a full scholarship.
Despite scholarships and grants, students are racking up debts due to the accumulation of costly schooling fees.
According to a recent report by the College Board, a national non-profit organization made up of more than 4,300 schools, colleges, universities and other educational groups, the national increase of tuition and fees at four-year public colleges and universities was estimated to be 9.6 percent between the 2001 and 2002 academic years.
Not including books, supplies, housing and other necessities, U undergraduates can expect to pay as much as $3,700 for the 2003 Fall Semester.Compared to the less than $2,450 for the same semester at Utah Valley State College, many U students will be among those borrowing for scholastic reasons.
Low-interest students loans seem like an attractive option in dealing with ever-increasing costs of tuition, books and fees. But credit counselors and loan officials warn of the long-term effects of accumulating large sums of debt during college years.
Dwight Day, senior counselor at Consumer Credit Advocates in Murray told The Salt Lake Tribune, “People can and do accumulate lots of debt while going to school.”
Instead of the sluggish economy, he believes it’s the financial institutions pushing credit cards on students that are influencing the amount of debt students are accumulating.
“Everyone’s situation is different, but what we have seen in recent years is that people are buying their books and other needs on their credit cards and, along with taking out student loans, building balances on both. It is a problem,” Day said.
The danger of poor financial decisions is even greater when such student loans are used to fund students’ lives, Kent Larson, director of financial aid at the U, told The Tribune. Larson said he has heard of such extreme cases where students take the minimum number of classes and use the full amount available of low-interest loans to pay for purchases such as new cars.
“The more students go in debt, the more they are mortgaging their future,” Larson said.
According to the U.S. Department of Education, 699 Utahns out of 20,669 borrowers were in default on their student loans for 2001. The default rate for the state of Utah is 3.3 percent, while the U has a default rate of 2.3 percent. But compared to the previous year’s 1.8 percent, it is evident that student-loan problems are on the rise.
To avoid getting themselves into debt early on, students are best off applying for grants and scholarships first. For those students who do not qualify for grants or scholarships, many loans-some backed by the federal government-are available.
Most loans go through the Stafford Loan Program, which has two basic types of interest-bearing loans: subsidized and unsubsidized. The difference between the two is that in unsubsidized loans, students are required to begin paying interest when the loan is made, while interest does not begin to accumulate on subsidized loans until six months after the borrower graduates or is no longer enrolled.
“The six-month deferment is a leeway given so graduates can find employment,” Larson said.
Another trend among student loans are the private “alternative loans” coming from lenders like Citibank. The terms of these loans are stricter, but private borrowing by students now exceeds $5 billion nationally, according to the College Board.
A dependent undergraduate student with some family support can borrow as much as $2,625 the first year under federal financial aid programs. That same student can get up to $3,500 for the next year, and by the third and fourth year, the student can borrow as much as $5,500, reported The Tribune.
Independent undergraduates can borrow as much as $10,500 over a period of four years and graduate students have a borrowing range from $18,500 to $138,000, The Tribune also reported. Visit the U’s Financial Aid Web site at www.sa.utah.edu/finance.