Bozeman Daily Chronicle: Student loan debt, defaults rising in Montana
Kiah Abbey is halfway through earning her degree at Montana State University and figures she and her family have already taken out roughly $25,000 in student loans.
“It’s terrifying being in debt,” said Abbey. “I have cousins still in debt after 10 or 15 years out of college.”
Even for Abbey — a bright, energetic student active in the MSU Leadership Institute and who won election to be MSU’s next student body president — college loan debt is scary.
As a social science major, Abbey said she’ll likely have to go to graduate school or law school, which means taking out more loans. She talked about not wanting to end up on food stamps. Someday, Abbey said, “I would love to have a car. I would love to have a home, a family….”
The burden of debt worries not only students like Abbey, but also Montana higher education officials and national leaders. It’s easier to measure the growing size of the debt than to find solutions.
Nationally student loan debt is surging above $1 trillion. It has surpassed for the first time the nation’s credit card debt and car loan debt.
It could endanger the nation’s fragile economic recovery and possibly set the stage for a new economic crisis and increase the burden on taxpayers, the Associated Press has reported.
In Montana, student debt is also growing, according to Montana University System data:
More students are borrowing. The number of Montana freshmen taking out student loans grew from 2007 to 2011 from 55 to 61 percent.
Students are taking on more debt. The average Montana freshman’s loan for the first year of college grew from 2007 to 2011 from $3,692 to $5,502.
Graduates are leaving with bigger debts. The average owed by Montana students who graduated with loans increased from 2008 to 2011 from $21,125 to $23,894.
Low-income students are deepest in debt. Students whose families earned too much to qualify for federal Pell grants, for needy students, graduated in 2010 owing an average $18,046. Low-income students who received Pell grants graduated owing an average $25,698. Only 42 percent of students from families with income too high for Pell grants take out student loans, while 90 percent of low-income students take out loans.
More students are defaulting. At MSU, the two-year default rate increased from 2008 to 2010 from 1.1 percent to 4.1 percent. At the University of Montana, the default rate rose from 1.3 to 6.3 percent.
