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Report Documents Rising Debt of College Students

By Rene Sanchez
The Washington Post

College students and their families are in debt more than ever before. To pay for tuition they are relying on more loans, bigger loans, and borrowing at a rate that far exceeds the pace in which college costs and personal income are growing nationally.

Those are the central conclusions of a report, to be released Friday, that draws a stark portrait of how difficult it is becoming across the nation for many students and their families to afford college.

The report documents the explosion in student borrowing that has occurred in the past five years, a fact that has been a key part of debate in Congress this year over the future of federally backed student loans. It also details rising anxiety among middle-income families who fear that college could soon be either "out of reach" financially or have a strangling influence on their household income.

"This is something we all ought to be very concerned about," said Ted Freeman, the president the Education Resources Institute, a Boston-based nonprofit group. "This is a staggering issue for many families, and indications are it's only going to get worse."

An unprecedented number of college students now rely on loans to help pay their tuition. About 6.5 million students, nearly half of the nation's college enrollment, have loans and borrowing has reached a record level of $23.8 billion.

The report shows that since 1990 student borrowing has grown an average of 22 percent each year - a rate that is four times greater than the rate at which personal income has been growing nationally each year. Since 1990, college students have borrowed as much money as they did in the past three decades combined, the report states.

The extraordinary rise in students using loans has occurred even as increases in college tuition, which were steep and unpredictable at many universities in the 1980s, have leveled off and become steadier in recent years.

But under changes that Congress made several years ago more families are now eligible for college loans and can borrow more. That accounts for some of the surge in student loans, the report and other higher education specialists say. But they also contend that many families now have few other choices but to take loans because other forms of university and federal aid, such as grants or work-study programs, are not keeping pace with tuition increases.

At George Washington University here, for example, the student loan volume has increased by 37 percent in just the last few years. And as is the case at many other universities, officials there say they are worried about whether the new wave of students and families relying on loans will have the economic means to pay them back.

"I think more and more people are deciding that loans are the only option that they really have to afford college," said Dan Small, the director of George Washington's student financial assistance office. "It's something we're all very concerned about."

According to the report, the growth in loan debts has been most extensive at public colleges and among minority students. Since 1990, the average debt for undergraduates at public four-year institutions increased by 13 percent, and grew by 2 percent for students at private four-year colleges. Minority student debt levels have increased by 19 percent since 1990, as compared to 9 percent for white students, the report states.

These changes have been a central part of an intense debate in Congress all year about the future of federal student loan and tuition aid programs. As part of their plan to balance the federal budget by 2002, Republican leaders are calling for more than $10 billion in cuts in student aid over the next seven years. But Democrats have argued that the magnitude of that proposal could do great harm to middle-class access to college.

"Congress is in the process of magnifying this problem," said Terry W. Hartle, a vice president of the American Council on Education, which represents more than 1,500 colleges and universities.

But skeptics in Congress and elsewhere suggest that the cuts would not impose a great burden on many students if college and universities were taking more steps to hold their costs down. Some also contend that increases in student aid only encourage colleges to continue raising their prices, a point that higher education leaders adamantly dispute.