June 5, 2009

Educational Investment, Part III: Navigating a Sea of College Debt


I am in debt. In retrospect, my undergraduate career seems in part a veritable mission to accumulate debt. Since graduating I’ve stressed about debt, worked a couple of undesirable second jobs to repay debt, and I’ve even been known to defer debt, allowing it to simply growl beneath the bed from the back of my mind. I have nightmares where bill collectors show up at my back door with pitchforks - the only consolation being that so many of my peers are in the exact same situation.

This country is teeming with twenty and thirty-somethings struggling to manage educational debt, with a long string of people in their late-teens and early-twenties prepared to join us.

According to the Project on Student Debt, a nonprofit devoted to the issue, the portion of graduates in debt jumped from less than half in 1993 to over two-thirds in 2004. Factoring in inflation, debt levels for graduates rose 58% in that decade. The average public university graduate now finds him or herself owing over $17,000 in college debt. Students today can’t work while paying their way through college like their parents, either. Tuition and fees at public universities grew a whopping 40% between 2001 and 2006, and most students today are paying almost 200% of what their parents paid.**

However, President Obama’s budget for 2010 offers some rays of hope for reversing these trends:

Revitalizing Pell Grants
While Pell Grants have seen slight increases since 2006, rising tuition costs have softened the impact of these grants. The average Pell Grant that used to cover almost two-thirds of tuition cost now covers only one-third. The President’s budget offers to increase Pell Grants by $700 to $5,550 as well as promises to make the program mandatory as opposed to discretionary, so that all low-income families are ensured aid.

Making Perkins Loans Easy
The budget plan seeks to simplify the Perkins Loan Program, freeing up resources to increase the amount of money students are eligible to receive. Furthermore, proposed changes would discourage institutions from raising tuition or reducing grant aid.

American Opportunity Tax Credit
As part of the American Opportunity Tax Credit, college students are eligible for up to $2500 that can be put towards tuition, books, and other fees. The proposed budget for 2010 would make this credit permanent.

The budget also includes support for state efforts that improve college enrollment and completion, as well as a general commitment to streamlining the FAFSA application process, making it easier to understand.

And while none of this will do anything for my pocketbook, it does sound like things might be easier for my baby sister. Throughout this very blog, on the news, and from the political pulpit we hear that education is linked to healthier and happier lifestyles. Just think about how much you would learn, and what kind of knowledge you would seek, if given complete freedom to choose. Now, is the current price tag on that education worth it?

For more info on Default: the Student Loan Documentary, visit the website!

The Project on Student Debt's Factsheet is available in pdf format at the website.

This post was written by Allison Tritt, who lives in Wisconsin and blogs to foster global awareness and remind others that there is always a way to get involved. Please leave your comments or email Allison at ajtritt@gmail.com with any questions.

1 comment:

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