As costs continue to rise, those who think that college willeventually pay for itself might soon be in the minority.
Data from a 2000 National Postsecondary Student Aid Study showsthat an average student owed $16,928 in federal loans -- 84.2percent more than in 1992. The study also showed that tuition ratesare rising at a quicker rate than the federal loan dollarsavailable, meaning that the buying power of each loan isreduced.
A more localized study, conducted through the University ofMemphis' Office of Institutional Research, produced similarnumbers. It showed that undergraduates from a random sample of U ofM students owed an average of $14,864 in student loans.
Taking into account recent increases in tuition, it seems safeto say that the borrowing numbers will only get bigger.
"Do I expect tuition to rise? As much as I hate to say it, Ithink it probably will," said Assistant Vice President of FinanceDavid Zettergren.
"The state is telling us that we must cut five percent out ofour budget."
If tuition increases again for the 2004-2005 school year, itwould be the 15th consecutive year The University has raised itsrates.
Even with state budget troubles and inflation causing costs torise, there are certain things students can do to make going toschool as financially painless as possible.
One thing students can do is to become familiar with theirloans.
"It is really important for students to understand their debtand not just turn it over to their parents," Zettergren said. "Youhave to have a plan to pay that back."
In many cases, students also take out more than they need, justbecause there are eligible for it. This can cause problems whenstudents have to pay it back.
"Students need to be aware that because you are eligible for$5,000 per semester doesn't mean that's how much you are going toneed," Zettergren said. "The point is students need to budget howmuch it's really going to cost."
According to The U of M Institutional Research study, manystudents don't understand their financial situation. Of thestudents surveyed, almost half grossly underestimated the amount ofmoney they would need to pay back. On average the amount they owedwas $7,000 over their estimates. Students who are unaware of theirneeds and their spending habits can quickly accumulate unnecessarydebt, Zettergren said.
Zettergren also said students who are eligible should alwaysmake subsidized loans the first priority. These loans do notaccumulate interest while the student is in school.
"The strategy on federal loans is if you qualify, go forsubsidized loans, which would be Federal Direct loans or Perkinsloans," Zettergren said. "The unsubsidized accumulates (interestwhile student is in school), so you would like to keep that down ifyou can."
There is some good news, however, the current interest rates onall federal loans is below 4 percent.
For many students, even using these tactics will not keep themdebt free. But even after the debt accrues, there is an option tohelp save money.
The University's Alumni Association, for instance, is trying tohelp students who have loans to pay. It has started a partnershipwith Nelnet, a company specializing in loan consolidation.According to Interim Vice President of Alumni Dan Beasley, thispartnership will give members of the association a chance toconsolidate loans while interest rates are low.
"Each individual needs to evaluate from their personalsituation, Beasley said, "but with interest rates where they are,(consolidation) is obviously a good option."
Although it has only been four weeks since the program began,about 40 applications have been filled out. The program isavailable to all Alumni Association members.
