Ah, there is nothing like being in debt.
Every year when FAFSA time comes around, I have to start thinking about the upcoming year and the fact that I need to take out some loans to get me through the school year. I tell myself that debt is an investment, probably the same line other students in the same boat tell themselves.
Last year, I enjoyed a nice fixed rate of 4.6 percent, but then wham! In December, the federal government sneaked in legislation to raise student loan rates with the passing of the Deficit Reduction Act of 2005 (S. 1932). New rates start at 6.8 percent for student Stafford loans and 8.5 percent for Parent PLUS loans.
The entire purpose of the bill was to decrease the national debt. Federal programs such as Medicaid and Medicare suffered cuts as well.
Sadly to cover for others’ mistakes, this was the biggest student loan hike ever to take place. Due to the passing of S.1932, federal student loan programs will suffer $12.7 billion in cuts between 2006 and 2010.
Meanwhile, the median debt for students who completed a bachelor’s degree increased from $10,088 to $16,432 between the 1992-93 and 2003-04 school years. The study, done by the American Council on Education’s Center for Policy Analysis in Washington, D.C., stated that students who borrowed to complete their bachelor’s degrees increased from 37 percent to 62 percent. Although the figures only apply to federal student loans and were adjusted based on inflation rates, one fact is clear: students are racking up more debt.
I rushed to consolidate my two loans in time for the July 1 deadline. This seemed ridiculous to me; usually in most cases, students have more than one loan taken out from many outlets. The point of consolidation is to get all the loans combined place on a single bill sent monthly to pay a fixed amount.
Because loans are such a big part of college life, and many changes are taking place, why is there not much support out there for students?
Never did I get an e-mail from the financial aid office about the rate hikes. For such a big investment, more resources need to be made available to educate and alert students of options and rights.