Managing The Student Loan Challenge

By Lynne Martin and Barb Hendricks

student loan debt pile up

Student loan debt is real and deters all students – especially low-income students – from attending and completing college.

Money is always a stressful issue with students from low-income environments. Contemplating and incurring loan debt is beyond the scope of their future. In the year 2000, the average loan debt for full-time students was $17,000 according to data from the March 2002 State’s PIRGs Higher Education Project. Today, the national average ranges from $25,000 to $35,000 per college graduate.

This debt load seriously hampers and delays their ability to purchase cars, homes, other major consumer items and fund retirement plans.  Recently, USA TODAY analyzed Census Bureau data and found that since 2006, 25-to 34-year olds experienced the largest decline in homeownership rates in the country. There are approximately 37 million student loan borrowers with outstanding student loans today.

Burden Will Grow

The challenge isn’t likely to get easier. After years of historic lows, interest rates are likely to rise sooner rather than later. Any interest increase on student loans will further deter low-income students from attending college, thus adding to the growing disparity between those who can pay for college and those who cannot. The prospect of serious loan debt only perpetuates the cycle of poverty.

Crushing college debt is compounded by the mistaken notion many have about defaulting on a student loan. Many graduates think they can declare bankruptcy and the problem will go away. Student loan debt is never forgiven. Even partial payment can damage a person’s credit rating, which will hurt their ability to get a home mortgage, auto loan or credit card in the future.

What To Do

At Students Rising Above, we counsel low-income students to apply to the federal financial aid agency known as FAFSA and consider federal assistance in selecting their college or university.

The better the financial aid award, the lower the overall loan debt will be at graduation. Over 50% of our students graduate from college with no student loans as a result. The remaining students graduate with debt levels well below the national average.

The key to avoiding burdensome debt is for students to be aggressive in explaining their stories to the Financial Aid Office. Students should appeal quickly and succinctly and make the case that they have an unmet need. “No” doesn’t mean “no” until you’ve tried several times. We’ve seen this work many times.

Equally as important, students should consider attending the college that really wants them as demonstrated by a competitive financial aid package. Going to a college that won’t offer a significant aid package isn’t a trade-off often worth making. In helping students plan, we also encourage them to apply for outside scholarships, appeal for more funds from colleges, and ultimately consider the most competitive financial aid award offered.

This approach has proven to be a very effective for those headed to college through SRA. But it is also a sensible approach for any student or family concerned about taking on too much debt.

A National Problem Worth Solving

We can ill afford to create a two-tiered system in which some of our young adults are equipped with the necessary skills to compete in the 21st century and others are left behind. Taking out large loans to earn a degree that does not net enough to pay back the loan is dangerous, yet it still happens.

Used sparingly and wisely, student loans can help finance a college education and lead to a better life.  A college degree is one of the surest ways to economic opportunity and financial success for all students, but especially low income students. We’re pleased to be able to help so many promising students leave college with little to no loan debt.

Students Rising Above is an award-winning nonprofit organization that enables low-income, first-generation college students to attend a four-year college and achieve their educational aspirations. 

Lynne Martin is Executive Director of Students Rising Above. Barbara Hendricks is Director Of Student Programs.

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