Student loans anathema to many going to college
LONG BEACH, Calif. –
Jesse Yeh uses the University of California, Berkeley library instead of buying textbooks. He scrounges for free food at campus events and occasionally skips meals. He has stopped exercising and sleeps five to six hours a night so he can take 21 credits, a course load so heavy he had to get special permission from a dean.
The only thing he won’t do: take out a student loan.
“I see a lot of my friends who took out student loans, then they graduated and because of the economy right now they still couldn’t find a job,” said the third-year student, whose parents lost their jobs in 2009 and who grew up in the boom-and-bust town of Victorville, on a block with several houses in foreclosure. “The debt burden is really heavy on them.”
* * * * *Even as college prices and average student loan debt rise, educators in some sectors of higher education report they’re also seeing plenty of students like Yeh. After watching debt cause widespread damage in their families and communities, they’re determined to avoid loans no matter what.
What’s surprising is this: Educators aren’t sure that’s always such a good thing.
Students who take extreme steps to avoid debt at all costs, they say, may get stuck with something much more financially damaging than moderate student loan debt. They may not wind up with a college degree.
To pay for college and minimize borrowing, students are working longer hours at jobs and taking fewer credits. They’re less likely to enroll full time. They’re living at home. They’re “trading down” to less selective institutions with lower prices, and heading first to cheaper community colleges with plans to transfer later to four-year schools.
Those may sound like money-savers, but each is a well-documented risk factor that makes students less likely to graduate.
“There’s been such attention on student debt being unmanageable that current students have internalized that,” said Deborah Santiago, co-founder and vice president for policy research at the group Excelencia in Education, a nonprofit advocacy group. “If you can take out a little bit of loan you’re more likely to complete. If you can go to a more selective institution that gives you more resources and support, you’re more likely to complete.”
Nobody blames students for being afraid amid a flurry of news about debt, like a recent analysis estimating the average debt burden for 2010 college graduates who borrowed was more than $25,000, up 5 percent from the year before.
Getting almost no notice in recent reports was another stat: New borrowing nearly flattened last year, according to the College Board, and it declined on a per-student basis after accounting for inflation. Private borrowing dropped from about $24 billion in 2007-08 to about $8 billion last year.
What’s the upside of borrowing? Federal data analyzed by Santiago’s group and The Institute for Higher Education Policy in 2008 shows about 86 percent of students who borrow for college are able to attend full-time, compared with 70 percent of students who don’t borrow. That matters because about 60 percent of full-time students receive a bachelor’s degree within eight years, compared with 25 percent of part-time students.
Other research, meanwhile, shows just 26 percent of students who enroll in a community college hoping eventually to earn a four-year bachelor’s degree succeed within nine years. That compares with 50 percent starting at nonselective four-year colleges and 73 percent at selective schools.
* * * * *Student debt aversion is most pronounced among Hispanics and Asians, who borrow at lower rates than whites despite having higher financial need. It also appears to have the greatest consequences for Hispanics and blacks.
Fifty-one percent of blacks who had financial need but decided not to borrow had left school within three years without a degree, compared with 39 percent of those who borrowed, the study by Excelencia and The Institute for Higher Education Policy found. For Hispanics, 41 percent of debt-free students had left, compared with 32 percent who borrowed.
For students who don’t borrow to pay for tuition, the decision affects how much they work outside class — and that affects their path through college.
Isaac Romero, 22, a third-year student at Long Beach City College, works a nearly 40-hour-a-week job with a workforce staffing company that has him on assignment at City Hall. He goes from there to class from about 4 until 9:40 p.m. Two bus rides later he gets home, often about midnight. Weekends are for homework.
He hopes to transfer next year, earn a bachelor’s degree and then attend graduate school. He figures he’ll eventually have to borrow but wants to keep his debt as low as possible.
“Life would be a little more comfortable if I did take some loans,” Romero admits. However, he remembers his father agonizing over bills. Several friends have had cars repossessed.
“I just don’t want to go through that,” he said.
Article source: http://www2.tbo.com/news/nation-world/2011/dec/25/t2newso2-student-loans-anathema-to-many-going-to-c-ar-340435/
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