Spring Break
Student loans essential to many, lead to high debt
Kristi Kawanna
Issue date: 5/7/07 Section: News
With the rising costs of a college education, obtaining student loans is essential for many students.
While loans are a good option for students in need of financial assistance, loans can also create an overwhelming amount of debt.
"Borrow as little as possible. The amount which you should borrow depends on the cost of the school and your individual need," Claude Walker, director of state relations and media affairs for Illinois Student Assistance Commission, said.
"Since loans must be paid off, keep it to a minimum. Studies have shown that students who graduate with high debt postpone grad school, marriage and homeownership. Why limit your options?" Walker added.
About two-thirds of students borrow money to pay for college, and the average graduate leaves a four-year program with about $17,000 in student loans and $3,000 in credit card debt.
"The median Stafford loan debt in 2004 was $17,000. The average monthly payment was about $200 for 10 years. There is no required percentage which people must pay," Walker said.
According to the College Board, borrowing to pay for college makes sense because those with higher education levels have higher salaries.
The typical college graduate earns about 73 percent more than the typical high school graduate, and the higher pay covers the cost of four years of tuition and fees by the time the graduate is 33. Students who attend private colleges have higher costs and these students generally have their loans paid off by age 40.
When obtaining a loan, students should try and find the lowest interest rate possible.
"Loan rates vary from year to year. Stafford loan interest rates are usually among the best. If your loan is 'subsidized' then the federal government pays the interest while you're in school. 'Alternative' loan interest rates are based on your credit worthiness and whether you have a co-signer," Walker said.
The most important thing to remember when obtaining loans is to pay them back on time and not default on the loan."Make regular payments on time and you won't default. If you're facing financial hardship, contact your lender and try to work something out," Walker said. "We also encourage families to start saving early. Our 'College Illinois' prepaid tuition plan is really excellent," Walker added.
"Defaulting on a student loan is serious. It may result in wage garnishment and bad credit reports. It may make it harder to buy a car or home. Don't mess around...this is not a good way to start your post-college life," Walker said.
"I'm going to be a teacher so I wont be making a large amount of money. I worry that I'm going to have a tough time paying back my loans. But, I know how important it is not to default," Becca Anderson, a senior secondary education major said.
While loans are a good option for students in need of financial assistance, loans can also create an overwhelming amount of debt.
"Borrow as little as possible. The amount which you should borrow depends on the cost of the school and your individual need," Claude Walker, director of state relations and media affairs for Illinois Student Assistance Commission, said.
"Since loans must be paid off, keep it to a minimum. Studies have shown that students who graduate with high debt postpone grad school, marriage and homeownership. Why limit your options?" Walker added.
About two-thirds of students borrow money to pay for college, and the average graduate leaves a four-year program with about $17,000 in student loans and $3,000 in credit card debt.
"The median Stafford loan debt in 2004 was $17,000. The average monthly payment was about $200 for 10 years. There is no required percentage which people must pay," Walker said.
According to the College Board, borrowing to pay for college makes sense because those with higher education levels have higher salaries.
The typical college graduate earns about 73 percent more than the typical high school graduate, and the higher pay covers the cost of four years of tuition and fees by the time the graduate is 33. Students who attend private colleges have higher costs and these students generally have their loans paid off by age 40.
When obtaining a loan, students should try and find the lowest interest rate possible.
"Loan rates vary from year to year. Stafford loan interest rates are usually among the best. If your loan is 'subsidized' then the federal government pays the interest while you're in school. 'Alternative' loan interest rates are based on your credit worthiness and whether you have a co-signer," Walker said.
The most important thing to remember when obtaining loans is to pay them back on time and not default on the loan."Make regular payments on time and you won't default. If you're facing financial hardship, contact your lender and try to work something out," Walker said. "We also encourage families to start saving early. Our 'College Illinois' prepaid tuition plan is really excellent," Walker added.
"Defaulting on a student loan is serious. It may result in wage garnishment and bad credit reports. It may make it harder to buy a car or home. Don't mess around...this is not a good way to start your post-college life," Walker said.
"I'm going to be a teacher so I wont be making a large amount of money. I worry that I'm going to have a tough time paying back my loans. But, I know how important it is not to default," Becca Anderson, a senior secondary education major said.
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