Economic challenges

In these tough economic times, to pay or not to pay student loans, is one of the tougher calls that 2009 college students have to make.

President Obama suggested during his campaign, that the United States needed to make college more affordable and help students who are taking on high levels of debt. Graduating from college with large amounts of loans, he said, deters students from pursuing some careers. He pitched his plan to provide students a tax credit of up to $4,000 for tuition in exchange for performing community service.

The volatile stock market continues fluctuating upward and downward daily like a pinball on steroids. Rainy day funds and 401K's are in the toilet. Your parents have probably decided that making the first or second mortgage payments on time this month is a better idea than buying a new iPod or cell phone. Now, more than ever, college students are faced with very tough financial decisions which is having an affect on enrollment and delaying completion of degree plans.

Few students can afford to pay for college without some form of educational financing. Two-thirds of 4-year undergraduate students graduate with some debt, and the average student loan debt among graduating seniors is $19,237 (excluding PLUS Loans but including Stafford, Perkins, state, college and private loans), according to the 2003-2004 National Postsecondary Student Aid Study (NPSAS). The median is $17,120.


One quarter of undergraduate students borrow $24,936 or more, and one tenth borrow $35,213 or more. For federal student loan debt (excluding PLUS Loans), the figures are 62.2% and $17,036. Average cumulative debt increases by about 3percent, or approximately $550 a year. When one includes PLUS loans in the total, the average cumulative debt incurred is $21,899. Approximately one in 10 parents borrow PLUS loans for their children's college education, with a cumulative PLUS loan debt of $16,317.

So far, the only positive for Main Street to come out of the recent economic slowdown had been the drop in the price of oil. At first glance, the drop has equated to a slight decrease in price at the pump but, if the economy continues in this downward spiral the low price of oil could mean delays in moving to alternative energy sources. Besides, those meager savings alone won't be enough to change the pessimistic minds of Wall Street investors and many others.

Economists say that the credit markets are thawing but they are still frozen overall. The financial department of Richland College, where I am currently taking classes, reports only a 1% increase (14%) in the amount of financial aid loans that have defaulted this year. In an recent interview, (former) Richland Financial Aid Director Bill McMullen commented on the economy, education and some of the programs that are available on campus to assist students with financial needs.

Q. What are some of the financial aid challenges that you see for students who will be attending classes next semester?

McMullen: If the student wishes to participate in the Federal Student Loan program, finding a lender that still participates in the program can be challenging.

Q. President Obama has proposed legislation to increase the amount of Pell Grants that are available to college students. Do you think this is a good idea? Why or why not?

McMullen: If we can give students more money in grant programs, this reduces the amount they need to borrow. I support reducing students debt.

Q. What are some of the financial aid support sources offered by the Financial Aid department? What criteria if any do students have to meet to qualify for these programs?

McMullen: We offer several federal and state programs. The student will need to fill out the Free Application for Federal Student Aid. (FAFSA)
Traditionally, college students have always had to do more with less but students attending courses now or making plans to attend a secondary school in the future have enormous financial decisions that may hinder or halt their educational dreams.
Third-year Business Marketing major, Grant Nash said he was hopeful that the economy would correct itself over time and continue to grow.

"Thankfully, I'm not using any student loans right now to pay for school but I will be using them when I transfer to the University of Texas at Dallas in the spring."



The recent steps taken by the White House and Congress to bail out banks was supposed to improve the economic outlook and keep the markets moving. So far their moves have had little affect on the troublesome financial challenges that we all are facing.