A new story, Student Debt: America’s Next Bubble?, just released by foxnews.com shows that student loan debt has grown by 511% since 1999. In comparison, all other household debt including credit cards, auto loans and mortgage loans grew by only 100%. Coupled with the high unemployment rates and a lagging economy more students are becoming late and defaulting on their debt.
On the campus of Tarleton State University in Stephenville, Texas we asked students about their thoughts on the story and their current amount of debt. Julie, a senior at TSU, told us she currently has about $1500 in credit card debt and more than $15,000 in student loan debt. “I’m scared to think about what I am going to do when I get out of school. I don’t know if I will be able to find a job with the way the job market is right now.” She said “Maybe I can just put my loans on deferment until I find a job and move back in with my parents in the mean time.” She admitted that she was using her credit cards to fund some of her monthly expenses such as utility bills and food. “I can work part time to make the credit card payment if I need to. I will sack groceries if that is what it takes.”
Another student we talked to was optimistic about the future. Jonathan, a junior, said he was currently working full time and going to school. “My parents weren’t able to help me much with my school expenses so I am working to pay as much as I can. I was able to get some grants to help but it didn’t cover all of my tuition so I need to work to make up the difference.” He told us that by working it will take him longer to graduate but he was thankful he did not have to take on any student loan debt to get through school. Jonathan did say he had about $1000 of credit card debt. “Sometimes I don’t have the money for gas or food so I just use my credit card. As long as I can make the minimum payments I will be OK. When I get out of school and get a good job I will be able to pay it off.”
“I still have student loans and I graduated in 1997,” said Chris a graduate of Tarleton State. “With trying to take care of the kids and buying houses and cars it’s hard to get them paid off.” His situation is becoming the norm. Many students that graduated 10-15 years ago deferred their debts or consolidated them for longer terms to lower the payments. Student loan defaults and late payments are on the rise with the growing unemployment rate. Many adults are taking lower paying jobs just to have one which is forcing younger workers to go without a job because they don’t have the experience.
So what should students do? Go to a cheaper junior college first and/or apply for every grant and scholarship available. If that doesn’t work then they should just try the old method that many have used: work and go to school at the same time and pay cash for their education. Borrowing money to go to school should be used as a last resort.