A report released Thursday by WISPIRG’s Higher Education Project pointed out the growing trend in student debt in a time when tuition will likely be increased to deal with budget difficulties.
The number of students graduating with student-loan debt has doubled to 64 percent over the last eight years.
At UW-Madison, 52 percent of 2000-2001 students graduated with loan debt, averaging $16,154.
Not only is the number of students graduating with debt increasing, but the total amount of debt accumulated is also on the rise.
The report estimates 39 percent of students taking out loans are graduating with “unmanageable debt.”
In addition, 55 percent of African American and Hispanic student borrowers are graduating with unmanageable debt.
“Debt levels are skyrocketing, and as a result, many students are graduating with unmanageable debt burden,” said Emily Miota, WISPIRG’s Higher Education Advocate. “The situation is even worse for certain groups of students, who are likely to experience even more difficulty repaying their loans.”
According to the report, when loan debt exceeds 8 percent of a graduate’s monthly income, loan repayment becomes a hardship and is defined as “unmanageable” by loan-industry officials.
“Too often, debt burden becomes a ball and chain for student borrowers after graduation,” Miota
said. “Many student borrowers are taking on unmanageable levels of debt to finance a higher education.”
Private loans and credit card debt were not included in the study, which may mean the statistics underestimate the actual total of student debt. UW experienced a yearly average tuition increase of 7 percent over the last 15 years, paralleling the increase in student debt.
“The Board of Regents set our tuition; they are an unaccountable and unelected board,” said Maggie Brown, academic affairs director of United Council. “If we had an elected, accountable Board of Regents, we may not see these tuition increases.”
Solutions proposed by WISPIRG include increasing grant aid funding, providing tax credits on loan interest and allowing repayment flexibility.
Associated Students of Madison is lobbying the state Legislature to narrow the gap between financial aid and tuition.
“We want the link between financial aid and tuition to be directly tied into the budget-repair bill,” Jeff Pertl, ASM representative, said. Brown said larger student debt results in less money going back into the economy so it is important to invest in student aid.
“The UW System is the engine that drives the state’s economy,” Brown said. “It is imperative that we continue to build on the state’s investment.”