Michigan has the 11th-highest student debt load in the country. In 2010, the average student with a bachelor’s degree graduated with $25,675 debt from student loans.
In the 2009-10 academic year, the annual amount of loans taken out by college students reached $1.8 billion, a 49 percent increase from 2007.
That same year, student loan debt nationally surpassed credit card debt and is expected to exceed $1 trillion in 2011.
Public funding for Michigan’s universities has decreased, causing tuition costs to increase. In turn, increased tuition has led to an increase in student loans.
The increase in student loans does not necessarily mean an increase in degrees being received. As borrowing of money increases, students have to take time off school to work and save up money, making it longer before they receive their degrees.
At Eastern Michigan University, student loans for the 2010 school year totaled approximately $145 million for a student body of roughly 18,000. The change in annual student loans from 2007-10 at EMU was 46 percent.
“We have a lot of students who want to be able to work rather than take out loans or at least keep their loan debt down somewhat,” said Cynthia Van Pelt, the associate director in the Office of Financial Aid at EMU.
The federally funded work-study program at EMU can help students handle college expenses by allowing them to work on-campus jobs for paychecks. The federal government awards EMU $900,000, which the university is required to match by 25 percent.
Even though several students are helped by work-study, there are still students who meet the criteria but do not receive work-study due to lack of funds. Once the money allotted for work-study runs out, all others who are eligible must be turned away.
For 2009-10, EMU matched the $900,000 from the federal government at $349,000. This left the university with a little more than $1 million to offer in work-study to students.
“This year the university approved the match to be $1,000,000,” Van Pelt said. “That’s huge. That’s a huge jump, $700,000 to match the $900,000 that we get from the federal government. So that gives us almost $2,000,000 to award to work-study.”
Paying back loans might be even more overwhelming when interest rates are considered. Some speculate that by the time most college graduates pay off their loans, they will have paid double what they borrowed.
“Essentially, you go to college to get a degree to make more money,” EMU freshman, Lauren Golubski said. “Then you end up having to use that money to pay back college loans for years afterwards.”
Graduates must begin loan repayment after a six-month grace period following graduation, including the interest rates and loan fees.
First-year student Trevis Harrold said, “I don’t think Michigan schools make students aware of the debt they might face when they take out loans.”
Raising awareness about how to diminish loan debt could be a huge factor in decreasing debt for students. Federal regulations require universities to offer students the maximum amount of money they are eligible to receive, though Van Pelt warns students should only accept what they really need.
“Don’t treat the annual loan limits as a goal or a target,” Van Pelt said. “Treat it as a limit and accept what you really need, not what you’re offered.”
Instead of relying on loans entirely, incoming students should turn to scholarships to fund as much of their tuition as possible. A need-based and academic-based scholarship, the Education First Opportunity Scholarship (EFOS) is available to incoming freshmen at EMU.
When students meet the 3.0 or higher GPA requirement, score of 20 on ACT and are Pell Grant eligible, they can receive up to $5,545. Other
scholarships include the Emerald Scholarship and Challenge Award.
EMU also offers the need-based University Grant.
“This is awarded to students who apply for financial aid and are considered to have financial need,” Van Pelt said.
For the 2011 school year, EMU was approved for $5.4 million in need-based grants. These funds will help eligible students pay for college and decrease their need for loans.
The rule of thumb for minimizing student loan debt is that total educational loans should be less than your expected starting salary after you graduate and ideally less than half your starting salary.
Students should be well aware of the dangers of student debt and begin planning how they will pay off their borrowed money.
Harrold said, “College is an investment in yourself. College should be taken seriously because it’s going to help you find a job that’s going to make you able to pay off your loan debts.”
