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Student debt increasing faster than cost of living
Federal loan rates increase 2 percent
By Clayton Woullard
cwoullar@mscd.edu

Student debt has increased three times faster than the cost of living in the Denver-Boulder area, according to a recent report.

The report, released Aug. 3 by the Colorado Public Interest Research Group Foundation, or CoPIRG, says the average student debt across the nation has increased by 107 percent between 1993 and 2004, with the cost of living in the Denver-Boulder area increasing by 38 percent over the same period.

Meanwhile, health costs in the Denver-Boulder area have increased by 56 percent.

The data shows the striking costs for new graduates with tuition and college fees increasing, and interest rates on federal student loans, at their highest in six years. On July 1, interest rates rose nearly 2 percent to 7.14 percent on current loans and 6.8 percent on new loans.

“Tuition has been going up a lot faster than inflation, interest rates have been rising, students have been taking out private loans,” said CoPIRG spokesman Cory Nadler. “That all adds up to high debt when they graduate.”

According to the report, two-thirds of college graduates in 2004 left school with student loan debt. Graduates from public four-year colleges, such as Metro, held an average $17,250 in loan debt.

Metro spokesperson Cathy Lucas said Metro students use up to $84 million annually in scholarships, grants, loans and work-study opportunities.

The report is part of CoPIRG’s Student Debt Alert project, a larger effort to educate college students, the government and the public about student debt.

“The entire point of the Student Debt Alert project is that the lawmakers do take into account these scary figures and help out students for the future with whatever policy they do make,” Nadler said.

The CoPIRG Foundation recommends the federal government, along with state governments, colleges and universities, work to curb student debt.

Among the solutions, the report recommends increasing need-based grants, making loan repayment fair and affordable, promoting borrower protections for federal and private loans, and providing incentives for colleges and state governments who keep tuition costs low.

Nadler said colleges and universities can educate their students on how to avoid being in debt, but that policy changes need to happen at the state and federal level.

“It shouldn’t be on the students’ backs to make it happen 100 percent on their own,” Nadler said. “Higher education is something that’s so critical, it’s in the best interest of the public and our government to help students get through school.”

The commission also recommended a restructuring of the country’s financial aid system, including increasing need-based aid, consolidating federal grant programs to increase the purchasing power of the Pell Grant, and creating a new financial aid form to replace the FAFSA, or Free Application for Federal Student Aid.

In addition to paying off student loans, new college graduates must worry about paying for core expenses like food, rent and health care.

According to the report, more than 30 percent of 18-24 year olds lack health insurance coverage, and more than 25 percent of 25-34 year-olds are without it.

Some new graduates may find trouble in manageably repaying their debt. A recent report by the state PIRGs found that 23 percent of college graduates could not repay their debt as a starting teacher, and the same with 37 percent of graduates as a starting social worker.

According to a report released this year by the nonprofit Project on Student Debt, 7.7 percent of college graduates in 2004 owed $40,000 or more in student debt, an increase from 1.3 percent in 1993.

The report also said high-level borrowing has grown faster than low-level borrowing over the past decade.