In case you missed it, the cost of a college education is increasing dramatically. Public and private colleges alike are increasing tuition significantly, many because of state budget cuts. This has left many high school seniors in a bind. For years they have heard the media, their parents, their teachers and counselors say the best way to get a decent job with good pay is to earn a college degree. But now they wonder how they can afford it.
The Institute for College Access and Success’ Project on Student Debt conducted a recent survey that gives us insight into how students are paying for a college education. The results are astonishing and scary.
Students are choosing to finance all or part of their college education as increased federal financial aid has become available. That’s right…18 year old students – with no savings and no job – are taking on debt so they can continue school for four more years (at least). After four years of borrowing, this is what the study found:
(For full highlights of the study click here)
- Two-thirds of the class of 2011 held student loans upon graduation.
- The average borrower owed $26,600. (That means some had at least $53,000.)
- The above figure is up 5% from 2010.
- The unemployment rate for college graduates was 8.8% for 2011.
- 64 colleges in the study said more than 90% of their seniors graduated with debt.
- At 114 colleges, graduates had an average debt above $35,000. (That means some had at least $70,000.)
- The institute surveyed 1,057 colleges (that represents about half of all public and private nonprofit four year schools). They note that since “data is voluntarily reported by colleges, actual debt is likely higher than the report report indicates, especially because so few for-profit colleges chose to report data.”
- As debt levels increase, students are having a more difficult time repaying their loans. The study notes: “the percentage of borrowers who defaulted on their federal student loans within two years of their first payment jumped from 8.8% to 9.1% in fiscal year 2011.”
College debt will put you in a financial prison. You may spend decades there. And when you are in prison because you owe somebody something, you won’t get out until you have paid the very last penny.
This needs to serve as a wake up call especially to parents. How can we put our children in this situation where they think taking on college debt is their only option? We need to:
plan better and take care of our own finances so we will be in a better position to assist in paying for college;
give better advice to 18-year olds who really don’t know any better and show them how dramatically debt could impact their future;
get involved in the college selection process — it shouldn’t just be left up to them (especially if we are paying for some of it!);
push our children to excel in middle and high school so they have access to academic, athletic or fine arts scholarship;
help our children think creatively about how to pay for school.
We can’t afford to let our children start their adult lives – post-college – in a financial prison.
What is a creative way your child has paid for school?
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