Central Texas mom Joan Neppl-Wilhite has navigated student
loan applications, extended retirement plans and even bought a few lottery
tickets to help her two children in college.
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Most recently, the single mom put a plea on gofundme.com for
a portion of her daughter Marissa Wilhite’s estimated $60,000 tab to attend
Texas A&M University for an undergraduate degree.
“You have to be creative or your kids are going to get
creamed,” said Neppl-Wilhite, 50. “You are walking away with a $60,000 bill in
your pocket. I’m thinking, ‘My God, how do you even make it?’ It’s gotten out
of hand.”
Student loan debt weighs on state, national economy photo
Andy Sharp
Mohamed Bayo, a student at Austin Community College’s Round
Rock campus, stands in the campus amphitheater on Feb. 17. Bayo, who graduated
last year from Pflugerville High School, says he wants to know everything
involved with borrowing money so he won’t get into trouble later.
Neppl-Wilhite isn’t alone in her frustration.
Amid rising college education costs, the country is seeing a
surge in student loan debt and in those borrowers’ delinquency rates. The
combination, lawmakers and policy experts say, has led to a new kind of debt
crisis, and one that could become a long-term threat to the U.S. economy.
The U.S. student loan debt market, which grew 7.1 percent to
a record $1.2 trillion last year, is now the second-largest form of consumer
debt behind housing, according to the Federal Reserve Bank of New York. It’s
nearing the size of the $1.3 trillion subprime home mortgage market that helped
spark the last recession.
Student loan debt weighs on state, national economy photo
Ralph Barrera
Jan Ross Piedad, studying on Feb. 19 in the Texas Union at
the University of Texas, says she is trying to do whatever she can to cut down
her student loan debt. She also works on campus to help defray costs.
“There’s a lot of dynamics that are very different here,”
said Garrett Groves, economic opportunity program director at the Center for
Public Policy Priorities, which has spotlighted the issue in Texas. But “when
you’ve got a bowling ball of $1.2 trillion, how might that knock over some of
these other economic foundations?”
The impacts have been wide-ranging: Record numbers of
students are returning home as they delay a laundry list of economic and
personal decisions from buying homes to getting married. Many say they are also
reconsidering their career prospects.
Experts also say they are concerned that the crisis will
widen demographic gaps on college campuses, as minority students and those from
low-income families face tougher choices to access funding.
Student loan debt weighs on state, national economy photo
Stephen Spillman
Joan Neppl-Wilhite holds a photo of her daughter, Marissa
Wilhite, at her home south of Austin on Feb. 18. Through the use of a
crowdfunding website, Joan is collecting donations for her daughter’s study
abroad trip to Greece in June. Marissa is a junior at Texas A&M University.
“My family doesn’t have a whole lot of money to donate
towards college,” said Mohamed Bayo, an 18-year-old Pflugerville high school
graduate attending his first year in college. “It’s a lot of money dealing with
college.”
Loan struggles hit home
Texas has seen the default crisis firsthand as tuition rates
surge, fueling debt levels and delinquency rates.
“Particularly worrying is the fact that rising tuition rates
are driving an equally steep increase in college loan debt,” the Texas
comptroller’s office said in a recent report. “Many Texas college graduates and
former students are entering adult life hobbled by years and even decades of
crippling debt.”
Bayo, a first-year student at Austin Community College, visited
his financial aid office a dozen or more times over worries about borrowing
money.
Bayo lives at home to save money and help his single mom.
“I definitely know the grants are going down,” he said. “And
I don’t want to be stuck with too much.”
Bayo has reason to worry.
In 2012, 20.5 percent of the state’s Student Loans in India borrowers
were more than 90 days delinquent, surpassing the national rate of 17 percent
and marking the 10th highest rate in the country, according to the most recent
figures from the Texas comptroller’s office.
“That’s where Texas could be doing a lot better,” said
Groves.
Experts say a combination of higher fees since tuition
deregulation and a lagging grant program is fueling the increases.
As of 2014, Texas students owed an estimated $75.6 billion
in college loan debt, up about 7 percent from the previous year.
Texas tuition rates — once among the most affordable in the
country — now are catching up to the national average and greatly outpacing
health care prices, income, inflation and housing prices.
Texas colleges saw Hispanic enrollment fall 28 percent, or
149,790 students, short of 2015 state-directed higher education goals.
“A lot of the default
prevention efforts occur after students have left school,” Webster said. “This
is trying to create a system that will … have students make wise decisions
while they are in school.”
Meanwhile, students and policy groups such as Washington,
D.C.-based Young Invincibles are lobbying for relief this session. State
lawmakers are considering a 4.5 percent funding cut to community colleges even
as the state’s coordinating board has called for a 13.8 percent funding
increase, the group said.
“It’s the wrong direction to go,” said Colin Seeberger,
spokesman for Young Invincibles, a millennial policy and advocacy group, which
led a recent student rally on the issue at the state Capitol.
Meanwhile, to help prepare student borrowers, TG and the
University of Texas each are now offering online tools to let students estimate
future earnings versus debt based on their college and career plans. Policy
groups are also pushing to streamline forms such as the burdensome Free
Application for Federal Student Aid required for aid.
Addressing students’ needs before, during and after the
borrowing process is key to ensuring success, experts say.
“It isn’t just go to school and you will be successful,”
Webster said. “But go to school with a plan on how you are going to pay for
it.”
Source: https://educationloansinindia.wordpress.com/2016/06/28/student-loan-debt-weighs-on-state-national-economy/
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