The current outstanding student loan debt has now surpassed the outstanding current credit card debt, according to FinAid.org and CNBC’s report “The Price of Admission.”
FinAid.org reported that the student loan debt has been increasing at a rate of $2,853.88 per second, a rate that’s two to three times faster than the rising inflation rate.
President Barack Obama addressed the student debt crisis on Oct. 26, when he announced his plan for a student loan debt relief proposal.
In his recent syndicated column in The Bullet, Obama stated, “Living with that much debt forces you to make some tough choices. And when a big chunk of every paycheck goes towards student loans, it isn’t just painful for you – it’s painful to our economy and harmful to our recovery.”
Obama said that starting next year, his plan will allow student to cap their loan payments at 10 percent of their income as opposed to the current 15 percent.
Obama also proposed that student loan debt be forgiven after 20 years, as opposed to the current 25 years.
Additionally, Obama addressed the need to consolidate various federal loans. Currently, families may have multiple government loans with different monthly payments, according to the NY Daily News.
“If the plan is approved, people with different types of federal loans would have the opportunity to consolidate, simplifying to one payment per month,” writes The NY Daily News reporter Amanda Holpuch.
According to the Director of the Project on Student Debt Lauren Asher, one of the factors to the debt crisis is the fact that the cost of college is rising faster than both the average family income and student aid.
Furthermore, CNBC questioned whether a public university is truly cheaper in the long run than a private, for-profit university.
The CNBC report stated, “With state finances under pressure, public universities are relying more heavily on their students, raising tuition and recruiting more out-of-state students who pay higher rates.”
At the University of Mary Washington, tuition rose 8.8 percent for in-state students and 5.1 percent for out-of-state students for the 2011-2012 school year, according to a Bullet article published last May.
According to the university website, Virginia residents currently pay a total of $8,806 for the 2011-2012 school year, while out-of-state students pay $20,534. These costs do not include room and board, or other necessary expenses, such as textbooks.
In Virginia alone, 58 percent of 2010 graduates left school with an average student loan debt of $23,327, according to a report released by the Project on Student Debt.
UMW’s College Board profile states that the average debt for a UMW student after graduation is $15,630, about 33 percent less than the state average.
However, according to data provided to the College Board, out of the 305 entering freshmen who qualified for need-based aid at UMW, 273 were offered aid, and only 32 had their full need met.
Senior Katelynn Wheeler was concerned by the school’s lack of the need-based financial aid that is actually being met.
“I think it’s unfortunate that only 10 percent of students applying for the aid had their full need met.” Wheeler said. “Getting an education is such a vital part of furthering your life and career, and when you are denied that opportunity because you cannot afford it, it is very disconcerting.”
UMW Director of Financial Aid Debra Harber and Associate Director of Financial Aid Katherine Lister were both unavailable for comment.
However, FinAid.org offers some tips on how to minimize student debt.
FinAid.org reminds students that they are just that students.
They say, “Live like a student while you are in school so you don’t have to live like a student after you graduate.”
However, there are some financial aid options that are designed to help cover more than just tuition, like aid offered by the companies like Higher One.
CNBC profiled Higher One’s program.
“Those funds are supposed to cover books, housing and living costs,” the news source stated.
However, programs like Higher One’s do have their own drawbacks, particularly in fees.
According to CNBC, “Higher One charges $20 to replace a lost card. $19 a month for account that has been inactive for nine months, and 50 cents any time a customer keys in a PIN instead of swiping the card, which is how Higher One earns transaction fees.”
The main advice FinAid.org had for students was to look for federal loan programs first. “Federal loans are cheaper, more available and have better repayment terms than private student loans,” the website said.