Seventy-one percent of all undergraduates at the University of Wisconsin- La Crosse will have student debt after graduation. College students across the U.S. are required to pay for most of their education because the state budgets less for higher education year after year.
More students are relying on loans to help pay for their education, causing the student debt to increase significantly. The average student debt of an undergraduate at UWL is $24, 863 according to 2012 data from The Project on Student Loan Debt. Bob Hetzel, Vice Chancellor for Administration and Finance at UWL, says that the debt is now closer to $26,000.
In 2012 the average University of Wisconsin- Madison student debt was at $24,700, lower than the UWL student debt; the average University of Wisconsin- Eau Claire was $23,825; and the average National student debt was $29,400 for an undergraduate.
Since 2001 the UW system has received a total $612 million base budget cut. UWL has received a $15.68 million base reduction cut along with an additional $8.67 million in one-time reduction costs over the last 12 years totaling to $24.25 million dollars.
In 2002 the state of Wisconsin paid for 60.03% of UWL students’ tuition costs, leaving students to be charged 39.97% of their academic fees. Last year the state only paid 31.81% of UWL students’ tuition, leaving students to pay for 68.19% of their academic fees. These numbers do not include room and board, for which often students need to take out loans as well.
“I’m shocked at by how much I didn’t know about my debt. The numbers are so large I’m not even sure how to comprehend them. Honestly, it’s scary,” says UW sophomore, Arionna Gunderman.
According to CNN Money, graduate student debt is more than double that of an undergraduate. The national average graduate student debt rose 43% in the last eight years to $57,600.
“I’m going to go to grad school to become a guidance counselor, so it’s not like I will make that much money after graduation. I don’t know how I’m going to pay this off,” says UWL sophomore, Brandon Forcier.
The national student debt has surpassed $1 trillion. Only mortgage debt is higher.
Student debt is becoming an increasingly large issue because federal student loans cannot be refinanced to save money. An individual takes out a student loan at a 6.8% interest rate, the rate they are stuck with no matter if interest rates drop in the future. However, most loans such as mortgages and cars can be refinanced at a lower interest rate.
A federal student loan cannot be discharged by bankruptcy or even death of the student. According to CNN Opinion, social securities are being garnished to pay for a grandchild’s debt because the grandparent co-signed the loan.
The result of not being able to refinance student loans will earn the government $184 billion over the next ten years.
Elizabeth Warner, a Massachusetts senator, has proposed a federal bill to allow students to refinance old student loans at the interest rates offered to new borrowers. If this bill does not pass, students taking out bills prior to July 1, 2014 are locked into the 6.8% interest rate, while students taking out loans after July 1, 2014 will have an interest rate under 4%.
Warren argues the mounting student debt risks future household spending, consumerism and retirement savings. The opposition argues the government cannot afford to refinance federal student loans. Warren’s response to the resistance is the federal government allows for low interest rates all the time. Big banks can borrow money for as low as 1% while students are paying as much as 9 times more.
Hetzel notes that making loans less expensive for students would be easier than lowering the cost of college tuition.
Students that choose a standard student loan repayment plan must make equal monthly payments of at least $50 for up to ten years. The average UWL student with $26,000 in student loans, a 6.8% interest rate, and a standard repayment plan will have to pay $364 a month to pay off their student debt in ten years. This number would decrease if federal student loans could be refinanced at a lower interest rate.
UWL’s It Make$ Cents program offers money management help and education for students. On April 29th the program is hosting a loan repayment event at 6:30 p.m. in Reuter Hall. The program also provides financial advising hours in Reuter Hall from 5:30 p.m. to 8:30 p.m. every Thursday evening. Appointments are not necessary during these advising hours. Visit http://www2.uwlax.edu/It-Makes-Cents/ to make a separate appointment or to check out the program’s additional upcoming events.
For information on the different student loan payment plans after graduation and how to protect credit visit http://www2.uwlax.edu/uploadedFiles/Initiatives/It_Makes_Cents/managing%20your%20loans(3).pdf.