Loan Acceptance Rising With Upped Enrollment

LONG BEACH, Calif. — With more students enrolling in universities, more students are turning to student loans to help pay for college.

“”There has been a definite surge in terms of the people who are going to school,”” said Molly Sullivan, a spokesperson for college financier Sallie Mae. “”That of course increases the number of people taking out loans for education.””

In 1970 there were an estimated 8.6 million students enrolled at the university level. Today there are 16.7 million students, an increase of 94 percent. Outstanding debt on college loans in 1999 totaled $178 billion, Sullivan said.

The average amount owed on Stafford Loans, according to the U.S. Department of Education, in 1995-1996 for undergraduates completing their educations at public universities was $11,950. At a private university that amount rises to $14,290. For those who continue on to get a master’s degree, those numbers jump to $15,000 for a public college and $21,410 at a private college.

Recently, California State University at Long Beach students borrowed an average of $6,200 by the time they graduated in the 2000-01 academic year, according to Financial Aid Director Dean Kulju.

Students at CSULB could qualify for up to three types of loans to pay for their college education depending on their need: the Stafford Loan, a work-study loan and the Perkins Loan.

The Stafford Loan can be disbursed to any student wanting assistance for college.

“”Basically it is a federally sponsored loan program where there are two categories, subsidized and unsubsidized,”” Kulju said. “”Subsidized meaning while the student is in school, the interest is paid on their behalf by the government, that is if the student has financial need.””

The government will continue to pay for the interest for a six-month grace period after the student either graduates or withdraws from school.

“”The unsubsidized loan is for a student that does not have the financial need,”” Kulju said. “”While the student is in school they are responsible for the interest.””

Under the Stafford Loan, an undergraduate student can borrow up to $46,000 for school, but can only have $23,000 subsidized, Kulju said.

Work-study loans are also allocated to CSULB, Kulju said. The $1 million amount given to CSULB is only enough to where 600 students participate in the loan program due to their financial need. Students will work to pay off their loans while in school.

A Perkins Loan is also allocated to CSULB, and a maximum of $1,500 can be given to students who qualify per academic year.

“”The Perkins Loan is a good program because it is a fixed interest rate whereas the Stafford Loan is a variable rate,”” Kulju said.

The Perkins Loan rate is fixed at 5 percent and students are given a nine-month grace period to begin repaying the loans.

Kulju said that the loan could also be deferred or canceled if you become a police officer or teacher, for example. This loan is also being done through the campus instead of a bank, as with the Stafford Loan.

With an increase in the amount of loans given to students, the U.S. Department of Education last tear released a report called “”Debt Burden Four Years After College”” on the burden student loans had on bachelor’s degree recipients from 1992-1993, and how the loans are affecting them four years later.

The study found that half of those who received bachelor’s degrees in 1992-93 borrowed money to help pay for school, owing an average of $10,142. Of those that moved on to graduate education, 28 percent continued to receive loans for school.

Undergraduates who did not further their education owed an average of $7,100, left paying an average of $151 per month. Those who continued on to earn a master’s degree owed $17,200, paying an average of $246 per month. Only 16 percent of all borrowers from 1992-1993 were able to pay off or have their loans forgiven by 1997.

In 1992 the Reauthorization of Higher Education Act raised the loan limits. This group of students being studied would not benefit from the changes in the borrowing laws. The total amount of money borrowed that year was $17.2 billion. That amount would increase 38 percent to $23.8 billion a year later.

When students either graduate or withdraw from college, they can choose many types of options to repay their loans.

“”One of the common [plans] would be over a 20-year span and they would divide the payments up over that span,”” said Joshua Henry, information specialist for the Federal Student Aid Information Center

At Sallie Mae, the average time of repayment is lower. “”The typical [repayment] term is done in 10 years,”” Sullivan said. “”But we have various repayment options depending on what is in the best interest for each borrower.””

Henry said that there is also a different type of plan called an Income Contingent Repayment Plan.

“”That is where you send in some sort of documentation as to how much you make and your repayment will be based on that, instead of putting all the payments in a certain time period,”” she said. “”After 30 years, if you still owe money on that student loan, because of regulation of the government, you don’t have to pay anymore on it.””

Students can also consolidate their loans to simplify their loan repayments. The interest rate will never exceed 8.25 percent by law. Loans can be consolidated during the grace period, once a student enters repayment or during deferment or forbearance periods. A lender cannot refuse to consolidate a loan due to the number or types of loans, the school attended, the interest rate borrowers would be charged, or the different types of repayment schedules available to them.

— Daily Forty-Niner

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