Loan debt still burdens grads

DES MOINES — Logun Buckley is eager to graduate from college and pursue a career.

He is less excited about the student loan payments that await him.

'I'm not looking forward to it. I guess I'm worried that I'm going to default on my loans. It's a possibility,' said Buckley, a senior at the University of Northern Iowa who plans to graduate in 2017. 'I'm going to try my best to get a job and to pay it back, but sometimes you don't have enough to cover rent or this extra bill every month.'

Living with loads of student debt is a reality for Iowa's college graduates. The state ranks among the highest in the nation in average student debt load, percent of graduates with debt and percent of graduates who default on their loans.

College student loan debt nationwide has surpassed $1 trillion. It jumped 25 percent between 2008 and 2012, according to the not-for-profit Institute for College Access and Success, and eclipsed credit card debt to become the second-highest form of consumer debt behind only mortgages, according to the Federal Reserve.

Iowa graduates are faring worse than most: The state has the nation's ninth-highest average debt at $29,370 and ninth-highest percentage of graduates with debt at 69 percent, according to the Institute for College Access and Success, and the fifth-highest default rate at 17.3 percent, according to U.S. Department of Education data.'

Many factors to blame

The increase in student debt has been attributed to the rapidly increasing cost of college, which has outpaced inflation and income growth, lower education funding levels, and more students attending college.

State funding to higher education in 2014 was 10 percent lower than it was in 2005, according to a report from the State Higher Education Executive Officers Association.

Meantime, the cost of college rose 70 percent between 2002 and 2012, and the number of students attending college increased 11 percent between 2001 and 2011, according to the National Center for Education Statistics.

'Families and students borrow for college when they don't have enough savings and earnings. That's when families and students turn to student loan debt,' said Debbie Cochrane, research director for the Institute for College Access and Success, based in Oakland, Calif., and Washington, D.C. 'So what we've seen in recent years is costs rising because states are pulling back on support, and the same thing with grant aid just not keeping pace. And family income stagnated for many years during the recession.

'It's hard to tease out how much of a role each plays …

but clearly the collective influence of those trends has very clearly driven the rise of student loan debt.'

Until state and federal governments start devoting more funding to higher education, advocacy groups are attempting to stem the student debt tide by providing prospective college students with as much information as possible.

In Iowa, groups such as the Iowa College Student Aid Commission, a state agency, and the not-for-profit Iowa Student Loan work to inform students and families about the cost of college and the prospective amount of debt a student may acquire.

Iowa Student Loan provides a work sheet that uses tuition figures and expected salary information to project how much debt a student potentially faces.

Megan Garrett, with Iowa Student Loan, said since July 1, 2014, the people who have used the tool have requested loans at lower amounts than they originally planned by an average of almost $2,000.

'We obviously don't want to see students and families take out the maximum amount of student loans. We like to see them avoid that, if possible,' Garrett said. 'Different tools on our website promote smart borrowing.'

The Iowa College Student Aid Commission administers state grants and scholarships. Communications coordinator Heather Doe said the agency also works to educate prospective students and lenders.

She said the commission also offers educational tools for students contemplating loans, and also makes suggestions like taking college credit courses during high school and exploring work-study opportunities during college, and has sponsored a financial literacy program for students.

Doe said she is encouraged that since the commission started roughly five year ago to place a focus on reducing student debt, Iowa has slipped from the second-highest average student debt in the nation to the ninth.

However, Doe said the issue is not going away any time soon.

'We are a little nervous. …

We know we don't have a growing population in the state. We also have projections of more K-through-12 public students are going to be (classified as) needy, more on free and reduced-price lunch, 1 in 10 high school graduates are Hispanic in the next 10 years, we're going to have a lot more first-generation students,' Doe said.

'So it's still a concern that we need to know student loan debt is an issue that's not going to go away from us.'