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Wednesday, December 9, 1992
UNIVERSITY DAILY KANSAN
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from families with incomes of less than $15,000 received more grants and had an average debt of $2,300, while students from families with incomes of $60,000 or more had an average debt of $3,000.
Loans linger as future burden
Statistics also show that loans are the primary source of financial aid.
In the 1991-92 academic year, the largest single source of aid, $13.7 billion or 45 percent of the total student financial aid, came from Guaranteed Student Loans. GSLs are granted through banks and are guaranteed by the federal government.
A heavy debt load and a soft job market can force some graduates to default on their loans. In 1990, these defaults cost taxpayers more than $3 billion nationwide.
Kansas has seen its share of defaults, too. That same year, 33,616 loans were in repayment and 8,333, roughly one-fourth of those loans, went into default.
But seemingly good deals can turn sour after graduation.
David Holmberg, student loan collector at KU, said that the cumulative default rate on Perkins loans, which are given by the government to an institution for disbursement, was 2.8 percent and the rate on Health Profess student loans for nursing and medical students was 36 percent.
At the University of Kansas, most students manage to pay off their loans. While the average default rate for four-year public institutions in 1990 was 7 percent, the University default rate was 5.1 percent.
Often these students do not communicate or keep in touch with their lenders, said Carol Wirthman, vice president of student loans at First National Bank in Lawrence.
"If the students don't pay, then the matter is referred to a collection agency," he said, adding that there are 34 KU students who are currently in some stage of litigation.
"They are either embarrassed or think that nothing can be done to help them once they are in default," she said.
Keith Fitz-Simmons, student loan collector at the University of Kansas Medical Center, said that although medical students could easily gather a debt of more than $100,000, most managed to pay off their loans because of their high starting salaries.
For students who don't plan to earn six-factor salaries right out of college, President-elect Bill Clinton has a plan to help them pay off their loans.
Financial aid at four-year schools
The average financial aid cumulative debt of a student at a fouryear institution is $6,735. However, payments on the debt may exceed this amount because of interest accrued. While figures may vary with payment options the average fouryear student may pay back almost half again as much as was borrowed in interest alone. The percentage of students receiving financial aid:
About 42 percent of students in the last year of their program received financial aid and helped them their academic career.
Amount borrowed @ 8-10 percent
monthly payment total interest
$5,000 $62.34 $2,481
10,000 124.69 4,962
15,000 187.03 7,444
Source: The Washington Research Report
Craig Hughes, state party coordinator at the Clinton/Gore headquarters in Topeka during the election campaign, said that Clinton wanted to establish a National Service Trust Fund that would allow the Internal Revenue Service to garnish a percentage of a student's income or to work off their debt through community service.
Students could work as firefighters, police officers, or teachers paying off their loans after a number of years of public service.
But Clinton's loan plan is only a proposal for now.
MacPhee said she had offered debt
One other option, say financial advisers, would be to not borrow as much, but it is the last option a student wants to think about.
Chava MacPhee, assistant director at the KU financial aid office, said that the best way students could curb their debt while in college was to curb their lifestyle.
MacPhee suggested that keeping jobs, not having a car on campus and taking the bus and not throwing away money in bars or on expensive gifts would help trim their budgets.
"The biggest concern that students have with getting financial aid is that they are not getting enough money to keep up their standard of living," she said.
"There is a certain mind set that gives students the impression that they deserve that certain lifestyle," shesaid.
Sean M. Tevis / KANSAN
management classes for two years at the University, but the response from the students was low.
She also warned students to be responsible when loan repayment period came.
"It looks like money and it looks like fun, but it is actually a time bomb that is going to blow in their faces," she said.
Keith Buck, Kansas City, Kan.,
senior, already has a plan to help him
self off his $10,000 debt, not to
mention $2,500 in credit card loans.
He is going to move back in with his parents in Kansas City for a year, work and save enough money in rent and bills to pay off the debt.
Buck was told by one of his banks that even with a monthly payment of $50 a month he would still be making payments for the next 15 years.
"It does not make me happy at all," he said. "I cannot imagine going into middle age and still paying for my college. It is kind of depressing."
So despite the options, students still have to face the burden of paying off their debts.
The debt is always on their minds.
The Diazes have temporarily given up their desires for a new car and home. They plan to stay in their apartment and drive their 1979 Datsun.
"It is hard to be productive when you have this enormous education debt to pay off," Roland Diaz said. "You look into the future and all you see is this roadblock. But then again, the education is worth it."
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