According to the U.S. Department of Education, students borrowed 25 percent more than the last academic year, bringing the 2008-2009 total to $75.1 billion.
Two-thirds of American college students now graduate with an average debt of $23,186, compared to 58 percent of students who averaged $13,172 in loans 12 years ago, The Wall Street Journal reported Sept. 4.
According to the U.S. Department of Education, students borrowed 25 percent more than the last academic year, bringing the 2008-2009 total to $75.1 billion. The Journal article also noted that the need to pay for loans has begun to affect major life decisions such as careers.
“The Obama administration has an ambitious agenda to make college more accessible and affordable for students,” said Stephanie Babyak, a spokeswoman for the U.S. Department of Education.
Thursday, the U.S. House of Representatives passed the Student Aid and Fiscal Responsibility Act. The bill passed in a 253-171 vote and now goes on to the Senate. The bill converts all new federal lending to the Direct Loan program, instead of lenders that are subsidized by taxpayers. The switch to direct federal lending will mark “the single largest investment in federal student aid ever,” Rep. George Miller, D-Calif., told The New York Times in a Sept. 17 report.
But Duke started earlier than the federal government, instituting its own agenda to make the University more affordable. In December 2007, Duke followed in the footsteps of Harvard University and announced a new financial aid initiative, which eliminated parental contributions for families with incomes less than $60,000, eliminated loans for families with incomes less than $40,000, reduced loans for students from families with incomes up to $100,000 and capped loans for eligible families with incomes above $100,000.
“I’m not sure our students are graduating with more debt,” said Alison Rabil, assistant vice provost and director of Financial Aid. “I think we’ve stayed pretty steady. Our debt isn’t growing. That isn’t saying that the debt that our students are graduating with isn’t significant, but the Financial Aid Initiative introduced a year and a half ago made a big difference for our middle and lower class families.”
This past school year, the total borrowing limit for dependent undergraduates who chose to take out federal Stafford loans grew from $23,000 to $31,000 over four years, which Rabil said other universities used to alter financial aid policies under the impression that the loans could cover funding otherwise provided by financial aid. But she noted that Duke caps the Stafford loan amount at $5,000 a year, totaling a maximum of $20,000 over four years.
“We’re not hitting the old max, much less the new one,” Rabil said.
Graduating with debt
Although Rabil said Duke students may not be as adversely affected by debt as those at other institutions, the aftermath of college loans is still playing a role in post-graduation decisions.
“I don’t think you make decisions based on money,” said William Wright-Swadel, Fannie Mitchell executive director of career services. “The key is that there is never just one variable that should drive any decision, that’s true at graduation, and I suspect it is true coming in. Students tend to think about what’s right there and when you use only one factor you almost always get in trouble. I think debt does that to many students.”
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But for some Duke students like sophomore Nana Asante, money does seem to play an important role in future career decisions. She said because Duke does not provide what she considers reasonable financial aid, loans are the only way she can pay for college. Asante added that though she may not be interested in attending law school, she feels obligated to do so because it increases her chances of landing a high-paying job that could help pay off her loans.
“For me, to do otherwise would seem like a waste of a Duke degree that I have invested so much into,” Asante said.
Wright-Swadel noted that the debt conversation is not new and that there are many students like Asante who have a similar outlook on the future. He added that it is important that students understand that they do not have to enter a field they are not interested in. Wright-Swadel also advises students to engage in conversations with various resources such as career counselors and financial aid advisers to make informed decisions regarding loans.
“It becomes a matter of educating students on going back to financial aid, to really understand programs for deferral and other options on handling this,” Wright-Swadel said. “There are many ways students can still pursue things that they care about.”
Sophomore Tyler Seuc is considering programs like Teach for America and the Peace Corps that have debt-forgiveness, but is also thinking about continuing on to graduate school or a high-paying job afterwards to pay off student loans.
“The fact that I will personally be graduating with a tens of thousands of dollars in loan—excluding the fact that my parents will be paying off their own loans for quite some time—makes me understand that I essentially have to get a job immediately,” Seuc wrote in an e-mail.
Despite recent economic hardships and the University’s plan to trim its $125 million budget shortfall over three years, Rabil said the Financial Aid Office’s budget has not been tampered with.
“That speaks to the commitment Duke has to students who have applied and gotten in,” she said. “We’re not trying to beat out our competition. We’re trying to make sure that if you want to come here, you can come here. It’s a testament to the value we place on our students.”
Although Seuc is weighing various post-graduation scenarios to offset the high cost of four years at Duke, he said the financial burden is still worth the experience.
“I do believe that the loans are worth it—well, most of the time,” Seuc said. “I had the opportunity to go to other schools for much cheaper or for free, and I chose not to enroll. I think that the education I am receiving here, in addition to the experience and the influence that the name Duke has, makes graduating with the amount of loans, as well as living these years with financial strain, worth it.”