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Rising student loan debt cause for worry

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The thought of graduating college in four years with exorbitant debt was enough to make Adam Stevens temporarily shelve his collegiate plans.

SARA CALDWELL/STAFF
Computer work stations are available for financial aid applicants at Augusta Technical College.  Chronicle file
Chronicle file
SARA CALDWELL/STAFF Computer work stations are available for financial aid applicants at Augusta Technical College.

It would cost the 19-year-old North Augusta resident more than $40,000 to pursue a bachelor’s degree at the University of South Carolina, where he attended his first semester in the fall.

“That’s assuming that I stayed on track with what I was doing and only went here for four years,” he said.

Stevens’ fears are well-founded.

National student-loan debt surpassed the $1 trillion mark, rising by $33 billion in the third quarter of 2013, according to a November report released by the Federal Reserve Bank of New York. Delinquency rates for student loans also increased by a percentage point to 11.8 percent, when compared to the previous quarter.

Student-loan debt now follows only home mortgages in household debt, ahead of auto loan and credit card balances.

With colleges around the country hiking tuition prices and a shaky job market for new graduates, Stevens chose to leave school and instead move back home with his parents in hopes of finding a temporary job.

His original plan was to pursue a degree in graphic design, but he knew that he might change his mind and attend school for longer than four years. He also knew there was no job guarantee after graduation, which could cause trouble making loan payments.

Although his parents were willing to help finance college, Stevens said the cost he would rack up in debt still seemed insurmountable.

“I knew that they could only pay for so much, and at a certain point when I was done, I’d have all this money sitting on my shoulders,” he said. “I wanted to step back and see if I could go about it in a smarter way and maybe find a cheaper option, because it was just so daunting.”

IN SOUTH CAROLINA, about 55 percent of college students graduating with a bachelor’s degree in 2012 accrued an average of $27,416 in student-loan debt, according to a recent report compiled by the Institute for College Access & Success. The report also found that, in Georgia, nearly 60 percent of graduates faced an average $23,089 of debt.

To calculate state-by-state averages, the institute used data provided voluntarily by more than half of all public and private nonprofit, four-year colleges.

The institute’s Project on Student Debt showed that 71 percent of 2012 graduates had accumulated student-loan debt to the tune of $29,400, on average. From 2008 to 2012, the institute found that average debt including federal and private loans increased each year by six percent.

“Despite discouraging headlines, a college degree remains the best route to finding a job in this tight market, but students and families need to know that debt levels can vary widely from college to college,” the institute’s president, Lauren Asher, said in a statement. “If you need to borrow to get through school, federal loans are the safest way to borrow.”

Georgia State University economist Rajeev Dhawan said students graduating with high loan debt often dial back on certain purchases, causing a trickle-down effect to other areas of the economy, such as discretionary spending on home furnishings and electronics in addition to the housing market.

“That is the channel that will play out over the years,” said Dhawan, a professor and the director of the economic forecasting center at Georgia State University’s J. Mack Robinson College of Business. “It doesn’t happen in a quarter or two quarters. This is a long-term thing. You’re already beginning to see that in little bits of the data.”

Dhawan also said the current economic state is partly responsible. In past years, parents could more easily take a home equity loan to help fund their child’s education, but lowered home values in the wake of the housing bubble has made that more difficult, he said.

“People want to get educated, because they believe that education pays off … it’s OK to take a debt to get the education,” he said. “But, the issue is how much? That is where people end up sometimes making a mistake to take on too much debt.”

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raul
4899
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raul 02/01/14 - 09:47 am
7
0
But, President Obama thinks

But, President Obama thinks everyone should go to college. I question his grasp on reality on so many issues. This student loan situation has the potential to be the next housing crash.

Sweet son
10429
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Sweet son 02/01/14 - 12:35 pm
5
0
Is the military a choice? Maybe!

With the war in Afghanistan supposedly winding down now might be the time to sign up for the military and attend college under the GI Bill. Just thinking.

lovingthesouth72
1368
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lovingthesouth72 02/02/14 - 11:03 am
7
0
two words

Community College for the first two years, get your core curriculum out of the way at home, while you can work and save up. Might want to read this book: Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, orMooching off My Parents by
Zac Bissonnette

jimmymac
40145
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jimmymac 02/02/14 - 12:39 pm
1
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DEBT
Unpublished

Try working your way through college. I did and know many others who did the same. I guess I didn't get to enjoy "the college life" but I didn't end up in debt. I know when you're paying your way through school the classes are way more important when you've paid the tuition yourself. The ability for many marginal students to get loans to attend school is just wrong. Trade schools and Tech schools can be the path for many to get good paying jobs without breaking the bank. I guess fun trumps common sense.

Little Lamb
46094
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Little Lamb 02/02/14 - 04:52 pm
4
2
Everybody

Yes, president Obama wants everyone to go to college and rack up astounding debt. That way, they will become useful tools for the Democrat Party to consolidate and expand their power over Americans. Liberty is lost when debt becomes crushing. Liberty is what Democrats hate.

KSL
130198
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KSL 02/02/14 - 05:03 pm
4
1
My oldest son went to USC. He

My oldest son went to USC. He was awarded one of the first 40 Palmetto Schlarships. This was pre-lottery. It paid pretty much all if his tuition, room and board. We paid his insurances as we had always done. He worked in the summers.

He stayed at USC, getting his Master's in International Business. He got a student loan and worked during the 2 years that master's takes. He would not hear of us helping him.

corgimom
32631
Points
corgimom 02/02/14 - 05:26 pm
4
1
I went to state schools and

I went to state schools and community colleges, and didn't go to the colleges of my choice, but I did just fine. I worked and went to school at night. It took 8 years to get a 4 year degree, but I managed.

I never lived in a dorm, never had the "college experience"- whatever that means- and didn't miss a thing.

And I graduated debt-free.

It can be done, but it means not having exactly what you want.

teaparty
11313
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teaparty 02/02/14 - 06:19 pm
5
2
"It can be done, but it means
Unpublished

"It can be done, but it means not having exactly what you want."
corgi, I agree but that IS NOT THE TYPICAL liberal view. Most liberals expect exactly what they want and expect someone else to pay for it.

Riverman1
84271
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Riverman1 02/02/14 - 08:51 pm
4
0
Watered Down Degrees

These days college degrees are so watered down with everyone wanting to go to college that they are worthless. Colleges encourage students to borrow money to pay for these "degrees" the schools know won't make the students a living. There ought to be a law.

Sweet son
10429
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Sweet son 02/02/14 - 09:03 pm
3
0
Education is also a parent's responsibility!

If you have children then you should take responsibility for them completing the educational process. My wife and I placed money aside for education and we are the proud parents of a child who has a Bachelor's, Master's and Doctoral degree without debt. We were lucky enough to be able to put these funds aside.

I realize this is not always the case but parents must take part of this responsibility to further the educational process as long as the student stay on track!

KSL
130198
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KSL 02/02/14 - 09:21 pm
1
1
River

Both of my chidrem were college material. In fact, we have been going to college, at least the main line, for 7 or 8 generations, or more. The lessor line, at least on my husband's side, founding a GA collge 6 or 7 years ago.

It is watered down now for certain. Do you know how to do a cube root? This is not a question to embarrass you. She did not teach me how to, thank goodness. I could do square roots, but what a bore. They failed to teach me the use of them, where I planned to be going.

KSL
130198
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KSL 02/02/14 - 09:26 pm
0
1
The everyone going to college

The everyone going to college deal has been going on since the 70's. It goes back to Carter.

Riverman1
84271
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Riverman1 02/02/14 - 09:36 pm
0
0
Good comments by both of

Good comments by both of y'all.

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