Understanding Student Debt

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Understanding Student Debt

  1. 1. UNDERSTANDING THE STUDENT LOAN DEBT STUDENTS ACCUMULATE IN COLLEGE Wendy M. Knight Graduate Research Day May 2, 2014
  2. 2. DISCUSSION POINTS  Purpose  Significance  Findings  Importance in Higher Education  Implications for Student Affairs Professionals  Recommendations  Conclusion
  3. 3. PURPOSE  The purpose of this study was to understand the student loan debt students accumulate in college
  4. 4. 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
  5. 5. 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
  6. 6.  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
  7. 7.  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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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.

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