Student debt on the rise

Due to a weak economy, rising tuition costs, and rapidly evaporating savings, college seniors around the nation are feeling the pressure to pay off their debts after graduation. Uncertainty about the future economy has prompted many families to reconsider their options as student debts rise.

Ten years ago students from middle-income families did not really have to worry about paying off a huge debt load. Over the past ten years, however, student indebtedness has grown substantially, "with an average debt of about $18,000 today compared to $8,000 ten years ago," according to economics professor Gilbert Metcalf. "Now, the pressure to get a good job and begin repaying the debt is great," Metcalf said.

Last month, Tufts placed 35th nationwide on US News and World Report's "Great Schools at Great Prices" rankings. The list was compiled based on a price-to-quality ratio. US News calculates this figure by weighing the discounting ratio _ the amount of aid received /cost of tuition _ the percent of students receiving aid and the US News' top 50 rankings.

Currently, 39 percent of Tufts students receive grants based on need, dropping their average cost down to $19,752. These grants, however, far from cover students' financial need, as a large portion of the grants are made up of loans.

Subsequently, the economic downturn has led many families to question the value of a private education at Tufts over many other appealing _ and less expensive _ alternatives.

Often public universities' digestible tuitions lure top students away even as those schools are also increasing their tuition and fees, according to The College Board. On average, those increases were nearly ten percent this year, compared to less than six percent at private universities. Luckily, Tufts is not as dependent on government subsidies as its public counterparts.

Kyam Shell, a senior from a private school in Montr?©al, received an acceptance letter from Tufts last spring as well as from a slew of other American and Canadian universities. Tufts was his top choice overall, but Tufts does not grant aid to international students. Faced with the alternative of attending a Canadian school and saving a potential debt load of over $100,000 Shell's choice was an obvious one.

"I figured the quality of education was the same north of the border and there was no use taking out a mortgage just to live my dream of going to an American university," Shell said.

There are also several benefits to the current economic situation. Institutional interest rates are at very low levels, around four percent for most ten-year loans. Repayment options at Tufts are quite flexible and include, monthly payments, graduated payments _ which increase in amount over the time you are repaying the loan, income contingent payments _ where how much you pay depends on how much you make, and an option to spread the payments out over 15 or 20 years instead of ten.

These loans are set by government regulations, according to Associate Director of Financial Aid Patricia Riley. The University is only able to affect student debt by changing the amount of grants awarded, but she feels that Tufts is preventing debt from rising. "As our costs go up, financial aid goes up... the average debt [at Tufts] hasn't gone up very much in the past few years," Riley said.

Students typically take out the maximum available amount in loans, and since the work-study option is typically used to capacity, it is the grants section of financial aid that has been increasing, Riley said.

When granting loans, the government recalculates Tufts' cohort default rate (CDR) _ how frequently alums default on their loans _ each year. Last calculated in 2000, Tufts rate was a mere .9 percent as compared with the 5.9 percent national rate for 2000.

The effects of the current economy have yet to be seen. Tufts students who default on their loans this year will affect the next year's CDR and thus the generosity of government loans.

Nationally, however, "The shift in emphasis of federal aid dollars from grants to loans threatens to create a generation of debtors," Robert Atwell, President of the American Council on Education told US News.

Fortunately, there are provisions for student loan repayments that would make the plan more flexible for alumni in cases of financial uncertainty and unemployment.

Although repaying student debt may be a challenging task for some, Metcalf cited reassuring news for students. "The lifetime returns to a college education are probably higher today than ever before," he said. "Our increasingly service and technologically oriented society rewards employees with strong analytical and communication skills." Metcalf said.