understanding student debt
TRANSCRIPT
UNDERSTANDING THE STUDENT LOAN DEBT STUDENTS ACCUMULATE IN COLLEGE
Wendy M. Knight
Graduate Research Day
May 2, 2014
DISCUSSION POINTS
Purpose Significance Findings Importance in Higher Education Implications for Student Affairs Professionals Recommendations Conclusion
PURPOSE The purpose of this study was to understand
the student loan debt students accumulate in college
SIGNIFICANCE To aid student affairs professionals in
understanding the student loan debt students accumulate while in college
To give understanding to student affairs professionals the current interest rates on the student loans, payback options, and the effect on graduating seniors and job searches
To find ways to address and potentially avoid the student loan debt issue
FINDINGS The total amount of student loans
outstanding was over $800 BILLION dollars $300 billion was acquired between 2006 –
2010 Interest rates are between 4.5% - 6.8% Average student loan debt (as of 2010) was
between $20,000 to $150,000 First year undergraduate eligibility $3,500 - $9,500 Second year undergraduate eligibility $4,500 - $10,500 Third year and beyond undergraduate eligibility $5,500 -
$12,500 Graduate or professional studies $20,500
National default rate was over 8% Department of Education offers four
repayment plans; standard, extended, graduated, and income-contingent
The rising cost of tuition and the decrease in grant funding is increasing the amount of loans students are taking out
College graduates are not finding employment, or taking a mismatched job
More college graduates are moving back home after graduation
More students are struggling to make their monthly payments and are either applying for a forbearance or going into default
College graduates are being taken out of the purchasing market because of high student loan debt
IMPORTANCE IN HIGHER EDUCATION
A high default rate at an institution can result in loss of federal funding
The value of education vs. the loan debt Access to higher education seems impossible
to some based on high tuition and fee rates Less degree seeking students may have a
long term effect on job market and the economy
IMPLICATIONS FOR STUDENT AFFAIRS PROFESSIONALS Decreased retention rates Value of education questioned Dealing with the student in shock of the
amount of student loans acquired while attending college
The higher stress level of a student who is aware of the debt he or she has accumulated
RECOMMENDATIONS Each college/university or lending institution
should have a specialized office on campus which deals with student loans, past and present
Mandated yearly meetings with the students so they are aware of their current balances owed – being updated on what expected monthly payment will be
Mandate financial literacy classes to students, at least once a year as informative or refresher
CONCLUSION Current loan debt is a burden to students
leaving college, either by graduating or not Most students are unaware of their student
loan debt until they leave school Without a specially designated office with
knowledgeable staff students will not have a place to go to get their questions answered
The rising cost of tuition and fees is making access to higher education almost beyond reach
REFERENCES
Gast, S., & Glickman, J. (2011, September 12). Default Rates Rise for Federal Student Loans. Retrieved December 3, 2011, from ED.gov: http://www.ed.gov
Historical Interest Rates. (2011). Retrieved December 3, 2011, from FinAid! The SmartStudent Guide to Financial Aid: http://www.finaid.org/
History of Student Financial Aid. (2011). Retrieved December 3, 2011, from FinAid The SmartStudent Guide to Financial Aid: http://finaid.org
Hobijn, B., Gardiner, C., & Wiles, T. (2011, March 21). Federal Reserve Bank of San Francisco. Retrieved December 3, 2011, from FRBSF Economic Letter: http://frbsf.org
Kamenetz, A. (2010, August 11). Huff Post College. Retrieved December 3, 2011, from Huffingtonpost.com: http://www.huffingtonpost.com/anya-kamenetz/830-billion-in-student-lo_b_679497.html
Khalfani-Cox, L. (2011, April 14). Student Loan Repayment Options for Federal and Private Loans. Retrieved December 3, 2011, from Daily Finance: http://www.dailyfinance.com
REFERENCES CONTINUED
Lucas, D., & Moore, D. (2007). Guaranteed vs. Direct Lending: The Case of Student Loans. Measuring and Managing Federal Financial Risk, (p. 43). Evanston.
Not Just for the Elite A History of College Student Loans in America. (2008, March 15). Retrieved December 3, 2011, from Random History: http://www.randomhistory.com
Occupational Outlook Handbook, 2010-2011 Edition. (2010, December 3). Retrieved December 3, 2011, from United States Department of Labor, Bureau of Labor Statistics : http://www.bls.gov
Special Direct Consolidation Loans. (2011, November 16). Retrieved December 3, 2011, from Student Aid on the Web: http://studentaid.ed.gov
The History of Student Loans – Financial Aid for Economic Competition. (2011). Retrieved December 3, 2011, from Financial Shopper Network: http://financial-shopper-network.com
Toby, J. (2009). Using Carrots and Sticks to Improve American Colleges. Social Science and Public Policy , 42-47.