Students’ loans/Debts story

Students in University of Wisconsin La-Crosse need more financial loans for their college education because of the soaring academic fees. More financial loans mean heavier debt burdens and longer time of repayment in students' future. Students may reevaluate the need of attending universities.

            From 2002 to 2011, UW-L has lost over $6,344,762 from the state budget. Currently, UW-L faces another deep budget cut. With less money from the State, UW-L has to raise the tuition to maintain a high education quality. More students need Federal Students Loan to pay for their education.

            Financial need is the gap between the money that students receive from the state and the money that they are expected to pay. According to the UW-L Fact Book, with the increasing tuition and residence fees, fewer financial needs are met. In 2005, the in-state undergraduate annual tuition and fees plus the Room and Board fees are $10,045. The average percentage of financial need is 81%. However, in 2010, the in-state undergraduate annual tuition plus Room and Board fees are $13,540. The average percentage of financial need is 73%. A lower percentage means that students need to pay more money from their pockets rather than relying on the state.

            Louise Janke, the director of the Financial Aid Office at UW-L, predicts there will be more students who want to get the financial aid in the future because of the sluggish economy and increasing tuition; nevertheless, more students' loans requests may be rejected.

            As a result of students receiving fewer loans, they graduate with a heavier loan burden. According to the UW-L Quick Fact, in 2005, students who have loans graduate with an average indebtedness $13,948. In 2010, students who have loans graduate with an average indebtedness $21,420. In 2007, 62% students graduate with loans but in 2010, 69% students graduate with loans. More graduates have to consider the heavier loan problems.

            New York Federal Reserve's latest report on Household Debt and Credit shows that for the first time, in 2011, the amount of student loans will exceed$1 trillion, which is equal to the amount of credit card debt. With larger size of loans, graduates have to spend a longer time to pay for the loans.

            Mark Kantrowitz, publisher of fastweb.com and FinAid. Org, leading Web sites about paying for college, says "About a third of bachelor degree recipients this year have enough debt to have a 20-year or longer repayment plan." He says, "Unlike most other debts, even if you declare bankruptcy, student-loan debt does not disappear."

            Annie Spencer, who went to a small state school, then private graduate school with student loans, says, "Education debt has often been highlighted as good debt, because it's an investment in your future. But too much of a good thing can be harmful." Despite merit scholarships and working 30 hours a week, she acquired $85,000 in student-loan debt. Although she works for government now, with the high rent in NYC, she still needs to pay $600 a month in loan payments. She says it is tough.   

            Students in high school who may have financial troubles in the future really need to consider whether they need to go to college or not. According to the Bureau of Labor Statistics, in September 2011, a high school graduate earns average $37,319 per year. A graduate with a bachelor or higher degree earns average $46,915. The difference between these two is only $9,596; however, college graduates need to spend 4 years in training more than the high school graduates plus acquiring a heavy loan burden.

            Keith, Sherony, the chairman of economic department in UW-L, predicts, "The average salary for UW-L undergraduate students is $38,234. If we use the data on the 2010 UW-L Fact Book to predict and assume graduates spend $600 per month to pay the loan, they have to spend over 11 years to complete the loans payments." Sherony also mentions this is the ideal assumption. As few people teach students how to spend their money, a lot of graduates will spend much more than they earn. This means they will spend much more time on repaying the loans.

            Probable good news came out yesterday. President Obama announces his new student loan plan which allows borrows graduate next year and in the year following to pay only 10% discretionary income, a rate lower than 15% right now, over the period of 20 years. His plan provides slight relief to the millions of debt-strapped borrowers who already struggle to make their monthly loan payment. Many people argue the plan is too late and too little.