Survey Finds Students Unsatisfied With Federal Loan Program
By Kevin Joy
WASHINGTON – When Jen Deblasio began her freshman year at the University of Connecticut, her concerns about classes and dorm life outweighed any worry about annual tuition increases and far-off loan repayments.
Three years later, her perspective has changed. A few weeks into her senior year with more than $20,000 in loans, Deblasio works 10 hours a week at a work-study job to help her parents pay for her housing, food and books, and to defray 13 percent tuition hike this fall-$2,070 for out-of-state residents and $760 for in-state students, such as Deblasio.
“I’m so scared I’m not going to be able to pay these off,” Deblasio, 22, said of the loans. “But I’m more worried I won’t even find a job.”
With rising price tags at private and state universities, a growing number of students face the prospect of borrowing ever larger amounts of money each semester. The situation is particularly acute at public schools, such as the University of Arizona or the State University of New York system, where tuition rates soared by 39 and 28 percent, respectively, this fall.
About 9 million students currently receive some form of federal aid – a grant, loan or work-study employment assistance — at a cost of $59 billion a year, and approximately 400,000 more students will seek such aid next year, according to the U.S. Department of Education. But a nationwide survey released last week by the Coalition for Better Student Loans, a Washington-based advocacy group, shows that a high percentage of undergraduates find the federal aid inadequate and the borrowing limits too restrictive to cover the rapidly increasing costs of attending a four-year college.
In that survey, 91 percent of 400 students who responded said they want Congress to increase the amount they can borrow in federal student loans each year. And 84 percent said that if the government has limited resources to guarantee student loans, it should offer greater financial assistance to current and future students, rather than adjust or delay loan repayment rates for graduates.
“Federal loans have better terms and conditions, repayment plans and lower interest rates” than private loans, said Dallas Martin, president of the National Association of Student Financial Aid Administrators. “But educational costs continue to climb, so there’s a much larger amount of students forced to take out private loans.”
Amendments to the Higher Education Act established a need analysis formula for federal student aid more than a decade ago that the survey says is now outdated. A freshman, for example, may take out a maximum of $2,625 in government loans. That number has not increased since 1992 and is only $125 more than the limit in 1972. Students who participated in the survey said they would cap loans at $8,900 per year.
“The current borrowing amount bears little relevance to changes in consumer prices,” said Terry Hartley, senior vice president for the American Council on Education, which represents major colleges and universities. “Students know that $2,625 doesn’t buy as much as it did five, 10 or 30 years ago when the program was enacted.”
Hartley said loan of $4,000 for freshmen is more reasonable to meet modern tuition levels.
But a significant increase in the size of government loans would provide only a short-term solution and impose an even greater liability on graduates as they look for jobs in a shaky economy, said Elaine Solinga, director of financial aid at Connecticut College.
“I am leery about putting too much of the financial burden on students,” Solinga said. “If you increase loan limits, students will graduate with more debt. It’s a Catch-22.”
While Solinga said Connecticut College meets the full fiscal needs of its undergraduates, more of its students have taken out private or alternative loans over the past few years, . The private university raised its total charges for tuition, room and board this year by 6 percent, or $2,275, to $37,900.
The Connecticut State University system, which consists of Central, Eastern, Southern and Western Connecticut State Universities, also increased tuition by 13 percent for the 2003-04 school year-an average of $580 for in-state and $1,380 for out-of-state students. Wesleyan University and Trinity College, where a year of classes costs about $30,000, each increased tuition by 6 percent this fall. Yale University and Mitchell College both raised tuition by 5 percent, to $29,288 and $18,128, respectively.
The Coalition for Better Student Loans sent its survey results and proposals to members of Congress, who will be looking at federal spending as they consider reauthorization of the Higher Education Act next year. The coalition is asking for higher federal loan limits and the elimination of a 3 percent “origination” fee charged on such loans.
