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Ohio State Commits $50M To Financial Aid, Debt Continues To Grow
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Ohio State University says it will give $50 million more in financial help to students for the next four years to help them pay for college.
School vice president Dolan Evanovich says the scholarships and grants will help diversify and retain students as the cost of a college education keeps rising.
A recent study says the cost of a college education has outpaced inflation for decades and more students are paying those costs with borrowed money. In the U.S., total student loan debt now tops $1 trillion and the average student debt is $25,000
Ohio University sociologist Deborah Thorne describes herself as pessimistic about student loan debt.
“So many people now are burdened with student loan debt that they cannot escape, period. They cannot get out from under this,” Thorne said.
Federal government figures indicate more than 65 percent of college students who graduate with a Bachelor’s degree have some loan debt. Average student loan debt recently topped $25,000. But, Thorne says more college students are much deeper in hock. She adds most students are not being advised about the long-term consequences of taking out large loans.
“Think of the mood you would be in if you were the student who was graduating with $80,000 in student loan debt. I know that’s not the average. But, I frequently talk with students who are borrowing $20,000 per year,” Thorne said. They’re getting through school on loans and they’re graduating with $80,000 in student loan debt.”
To pay off a student loan of $80,000 in 10 years with a fixed rate of 6.8 percent, the graduate would have to pay $920 per month. A $25,000 loan can be repaid with the same interest rate with a payment of $288 per month for 10 years.
At Wiiliam and Mary College in Virginia, economist David Feldman also researches student loan debt and its economic and personal effects.
“We are in a world in which the distribution of income in the United State has changed dramatically over the past 30 years. We are less the middle class society that we once were,” Feldman said.
Feldman adds that as the middle class shrinks, and federal and state governments reduce their financial support of higher education, families with college age children are bearing an increased share of the cost. In 1975, Feldman says families paid about a third of the cost of college while now families pay about half of all tuition, room and board.
“So that’s a sea change, that’s a big change that families are now shouldering a much greater fraction of the bill,” Feldman said.
Still, Feldman argues that a college education is well worth the higher cost.
“Its like you’re investing in a lifetime of earnings differential that is, at a minimum, on average, $500,000 or more of extra earnings because you have a college degree,” Feldman said.
But, Thorne is less sure
“Staying in this holding pattern of giving more loans, more loans, more loans to students is dysfunctional. Its really short-sighted,” Thorne said.
The most recent figures show30 percent of outstanding student loans now have past due balances. But, borrowers will remain liable for the debts since student loans cannot be erased through bankruptcy.