New tool projects student loan debt
Current and prospective students can now directly compare USC’s debt burden to that of other universities with a single click.
An online college cost comparison tool was launched last week by the Consumer Financial Protection Bureau. The pilot version of the calculator compares up to three schools at a time and also provides the national average debt amount associated with private and public colleges, with information from 7,500 colleges and universities so far.
The tool is one of many attempts by the federal government to make college costs more transparent and prepare students for the rising debt costs associated with a college degree. Last month, the federal agency announced that national college debt has rocketed past credit card and auto loan debt at a total of more than $1 trillion, about an average of $25,000 per graduate.
While South Carolina’s debt rate falls just below the national average, according to the Institute of College Access and Success’s Project on Student Debt, officials are concerned with preparing students to pay off their loans.
“With the economy now, there’s a much greater awareness nationally about student debt, since families have to pay a larger amount of the cost of college,” Vice Provost Helen Doerpinghaus said. “We want families to go into this with their eyes open and want students to be smart about how they borrow.”
Some simple measures Doerpinghaus suggested were choosing loans with the cheapest interest rates, (the most common is the Federal Direct Student Loan) and making sure to graduate within four years, as extra semesters often lead to more borrowing.
“Think twice before withdrawing from a class, and be sure to choose the right major,” Doerpinghaus said. “Some students don’t realize it’s a timely issue, but I’ve advised students who have been here for five years, and that extra year is very expensive.”
About half of USC students end up taking out student loans after receiving scholarships and forms of aid, according to the Office of Financial Aid. Overall, Financial Aid and Scholarships Director Edgar Miller is pleased to find that those who do borrow pay off their loans quickly. Only 1.7 percent of USC students who borrowed defaulted their loan in two years, while the national average two-year default rate has climbed to nearly 8.9 percent. Doerpinghaus finds this is a testament to student responsibility and to some of the university’s out-of-classroom initiatives.
“The reputation of the university and its graduates matters to both lending agencies and the government,” Doerpinghaus said. “Students at USC are good when it comes to paying off their debt. Part of what we do is make sure they’re equipped to do that. In the past few years we’ve invested in the Career Center, because data show us that a big predictor for job placement is whether or not you do an internship.”
In addition to focusing on a job, Miller recommends that students who borrow, either from the government or from a private loan company, become familiar with the terms of their loans and avoid going into default by all means necessary. Foremost, he says the best plan for paying for the increased cost of college is to plan ahead. Academic scholarships, student employment, work-study and need-based grants should be explored before applying for a loan.
“Don’t borrow unless it is a necessity, and even then be sure to borrow responsibly,” Miller said.