What+is+the+average+student+debt+for+college+students?

Research Question: What does a college student face in terms of tuition and subsequent debt? Author: Maria Charbonneau

1) **Editorial Essay-** "College on Credit Has Kids Dropping Out" A) **Summary:** According to statistics, tuition is charged on credit cards for about 24% of college students. On average, there is a $6,000 gap between where the financial aid ends and where the actual cost of college begins. To fill this gab, students are increasingly turning to the plastic credit card to pay. 71% of college students charge food and books on credit cards. However, 10% of students fail to make even the minimum monthly repayment requirements on student loans. For this reason, and with an average credit card interest of 13.5%, credit card debt is a major factor in students’ decisions to drop out of college.

There is a for-profit company that was established in 1995 called Campus Door, Inc. This private company’s service is to offer alternative loans to students with the idea that they can cover when grants, scholarships, and government loans are not enough. According to a representative from Campus Door, Inc., repayments do not usually begin until six months to a year after graduation and tens of thousands of students have benefited from their program. [1]

B) ** Reaction to article: ** It is eye-opening to read that 24% of students pay for college with a credit card and that 71% pay for books and food with credit cars as well. Credit cards make it easy for one to pay for things because with just a slide of the card, the item belongs to that person. However, credit cards make it very, very easy to fall into debt quickly. It is important for one to realize that the debt from credit card spending can accumulate to crushing proportions with alacrity.

2) **Analysis Review**- "The Debt Crisis in Higher Ed- Make College Costs More Transparent" A) **Summary:** Student debt, at $1 trillion, is higher than credit-card debt in the United States. This new number is 50% higher than that of 4 years ago. For-profit colleges receive over a quarter of federal financial aid even though about half of the students at these colleges drop out within 4 months of schooling. Tom Harkin argues that this statistic should force people to reevaluate the standards to which schools receiving financial aid are held.

Harkin continues to argue that colleges must become more affordable; also, he emphasizes the importance for schools to become more “transparent.” By this word choice, he means that students need to know what // exactly // they are paying and for which services they are paying. Furthermore, colleges need to no longer think with “business as usual” logic.

Harkin suggests that colleges begin budget-counseling programs for their students and the families of their students. With this program, students will know their payment options as well as their financing options. Harkin firmly believes that the “college-affordability crisis” must be talked head on in order for America to maintain its competitive edge. [2]

B) **Reaction to article:** Like Harkins, I also believe that the “college-affordability crisis” must be met head on. Colleges // should // make themselves transparent; by doing so, they would help both the student and themselves. If the student knows exactly what he/she is paying for, the student is less likely to spend more unknowingly or to get loans when it might not be needed or to such an extent. Likewise, the college can depend on the student staying for the full term. It is a win-win for both parties involved.

3) **Summary Article**- "Student Debt: Is the college-loan system fair?" A) **Summary**: In 1998, Robert Applebaum graduated from law school with 80,000 dollars in debt; because he delayed repayment, that number grew quickly to 100,000 dollars. Eleven years later and still in debt, Applebaum asked: “Why doesn’t the government pardon all student loans to stimulate the economy?”

Many economists are concerned that college tuitions are making colleges unaffordable to tens of thousands of students. For the first time in history, in June of 2010, student debt, at $830 billion, was greater than credit-card debt. New student loans rocketed to $100 billion while tuition rocketed 375%. Furthermore, the requirements for a student borrower to repay are stricter than those for a mortgage borrower or a car-loan borrower; additionally, student borrowers can have their Social Security and certain federal benefits garnished. As a result, college debts pose a great financial risk to students.

Economists wonder whether students are borrowing too much money and there is much debate as to what is “an appropriate level of debt.” When asked whether a college degree is worth the debt, Donald Heller, a professor of education, replied, “earnings data shows that having some college is better than having no college.” Hiller went on to explain that lower-income students bear the brunt of paying for the schooling.

Some economists argue that the availability of government- subsidized loans for college has allowed for colleges to drive up the cost of tuition for its students. This, however, leads to a cycle: As the school receives more money in tuition payments, the school spends the money on improvements for the school, and then the increased tuition allows the student to qualify for more money in loans. The president of the Institute for College Access and Success, Lauren Asher, explains that, “Student loans should help people… that purpose is lost when people face the prospect of debt they can never repay.”[3]

B) **Reaction to the article**: I think this article hit the proverbial nail on the head when it comes to its discussion of student loans. It really is a vicious cycle- as loans are easier to obtain, colleges are more likely to increase tuition, and then the student qualifies for a greater loan. The outcome is always the same with this scenario. The student, and perhaps the student’s family as well, suffers financially. Like Applebaum, many students are still paying off college loans eleven years or more after graduation. Loans //should// be to help but invariably, and quite suddenly, that help becomes a weight around the student’s neck.

4) **Scholarly Article**- "Suffering the Borrowing Blues" <span style="background-color: #ffffff; font-family: Arial,Helvetica,sans-serif;">A) **Summary**: <span style="background-color: #ffffff; font-family: Arial,Helvetica,sans-serif;">Charles Dervarics argues that low-income students, as well as students of color, have a harder time getting loans for college than the students with higher incomes and those with white skin do. The reasons for this are “on-going credit crunch” and “tighter under-writing rules in the industry.” Both will impact the private loan market that serves low-income students who have already have maxed their federal- lending limits.

<span style="background-color: #ffffff; font-family: Arial,Helvetica,sans-serif;">Sallie Mae, a loan giant, announced that it would cut back on lending at postsecondary schools where there was a low rate of student success. According to national data, the graduation rates of African- Americans and Hispanics are behind those of Caucasians. Caucasians have a graduation rate of 59%, Hispanics have a rate of 46% and African-Americans have a graduation rate of 40%. As a result, some lenders are focusing lending on schools with better default rates.

<span style="background-color: #ffffff; font-family: Arial,Helvetica,sans-serif;">In 2007, Sallie Mae spent 1 billion dollars in bad private loans. It was determined to be “bad private loans” because about 2/3 of the loans went to students who eventually dropped out completely or moved to part-time status. According to a Sallie Mae representative, this is why it is a “lose -lose” to invest in students who will not graduate. Additionally, credit markets have tightened and the result is that it is now harder for students with poor credit ratings to get private loans. Furthermore, with the College Cost Reduction Act, lenders earn lower profits with this federally guaranteed loan program. Now, students usually need to have parents co-sign for private loans. All these loans come with a fixed interest rate of 6.8%. [4]

<span style="background-color: #ffffff; font-family: Arial,Helvetica,sans-serif;">B) **Reaction to the article**: <span style="background-color: #ffffff; font-family: Arial,Helvetica,sans-serif;">After taking an economic class this semester, I am beginning to understand the importance of supply and demand. While there is a huge demand for loans, especially from lower-income students, supply is short. I can understand the fact that lenders are losing when they lend money to students who will not stay in school. However, with that being said, regulations should, perhaps, be changed in such a way that interest rates are not set at such a high rate of 6.8%. Additionally, while I can understand that lenders are not prone to lend money to those who have poor credit ratings, they perhaps should form a system where students are given a “second chance,” of sorts, to receive loans.

Overall Reaction to Your Research
With increasing college tuition costs, college students nationwide are facing a crisis. It is very easy- almost too easy- to charge the cost of tuition to a plastic credit card. While there is immediate relief by doing just that, debt quickly builds. The statistic showed that 24% of American college students pay for college with a credit card. However, when students cannot make repayments on time, their financial standing with banks becomes very poor. As a result, it is harder to borrow in the future. I agree with Harkins in that colleges should make themselves “transparent.” By doing so, the student knows //exactly// he/she is paying for and can plan accordingly because no costs would be a surprise. As a result, borrowing would be “smarter” and there would be fewer instances where students cannot repay what they have borrowed.

Relevance in Rhode Island Schools
In Rhode Island, there are multiple colleges where students from Rhode Island and from other states may attend. Like other colleges nationwide, the colleges in Rhode Island are considered by some as too expensive to attend. As a result, some students are turning to charter schools for secondary education for focused learning. Because some fields do not require a college education but a focused learning education, charter schools are becoming more popular for those who may not be able to afford a four-year college.

Relevance to Charter Schools
Charter schools, at a secondary level, offer some students an alternative to college educations in pursuit of particular fields of studies. Because college education costs are getting to be so expensive, students increasingly are choosing to attend focused charter schools rather than college. If this trend continues, certain career fields may not be offered at colleges anymore if charter schools become more popular as the less expensive option.

> McGlynn, A. P. (2006, April). College on Credit Has Kids Dropping Out. //EBSCOhost//. > Harkin, T. (2012, October 29). The Debt Crisis in Higher Ed. -Make College Costs More Transparent. //Time Magazine//. > > > > > > > > > > > > > > > > > > > > Clemmitt, M. (2011, October 11). Student Debt: Is the college-loan system fair? //CQ Researcher//. Retrieved from [] > > > > > > > > > > > > > > > > > Dervarics, C. (2008, February 21). Suffering the Borrowing Blues. //EBSCOhost//. Retrieved from []
 * 1) ^
 * 1) ^
 * 1) ^
 * 1) ^