MONEY TREE: Borrowing For College Skyrocketing in Ky.
LOUISVILLE, Ky. (AP) — Kentucky college students borrowed a record $1.2 billion for higher education during the 2010-11 school year, and the average student will spend a decade shelling out $200 a month to retire their loans, new data shows.
“We have achieved a college-going culture with our students,” said Ted Franzeim, senior vice president of the Kentucky Higher Education Assistance Authority, which administers financial aid programs in the state. “The good news is one of the issues we faced was low aspirations. I think that’s really changed. The bad news is ... the supply of funding to support those students hasn’t increased as that population has increased.”
KHEAA data presented at the meeting of the Kentucky Council on Postsecondary Education shows that college students in the state owe an average of more than $19,000 apiece, and student indebtedness is growing at a rate four times greater than the state’s gross domestic product, with no end in sight.
“Basically, student debt is growing faster than the economy,” Franzeim said. “As student debt increases, there’s less money available to grow the economy.”
The report was presented to the state Council on Postsecondary Education on the same day the council approved tuition hikes at public colleges and universities for 2012-13 that reached as high as 6 percent. The council said the increases were necessary because of continuing state funding cuts for higher education.
The data shows that 58 percent of Kentucky college graduates had incurred debt for their education. The state ranks 43rd in the nation for student debt, Franzeim said.
The answer is to increase the amount of direct aid to students, he said, so that the well of grants and other state aid didn’t run dry by February every year.
There has recently been renewed discussion about student loans in Washington, D.C., with congressional bargainers heading off a doubling of interest rates on federal loans to 7.4 million college students nationwide.
Nationwide, college students who graduated in 2010 carried an average of $25,250 in student loan debt, according to the Project on Student Debt. Yet at the same time, unemployment for recent college graduates rose from 8.7 percent in 2009 to 9.1 percent in 2010.
The Project on Student Debt is part of the Oakland, Calif.-based Institute for College Access & Success, a nonprofit independent research and policy organization on college affordability.
The KHEAA data showed the largest increase in borrowing for 2010-11 was to pay for 2-year programs in the Kentucky Community & Technical College System. Franzeim said the increase is likely due to both students borrowing more as well as a large increase in enrollment.
The average community college student borrowed less than $500 in 2001, but that number increased to an average of $2,000 in the latest numbers, he said.