Student loan debt exceeds credit carddebt in USA
Published by: USA Today September 10, 2010

DETROIT — Many college students are carrying more than a heavy class load this fall.
Total student loan debt exceeds total credit card debt in this country, with $850 billion
outstanding, according to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com, websitesthat provide information about student aid and scholarships.
Consumers owe about $828 billion in revolving credit, including credit card debt, according toseasonally adjusted numbers in a report on July credit from the Federal Reserve.
DEBT: Credit card use keeps falling amid economic uncertainty
YOUR MONEY: Student loan program changes affect rates, repayment
Finaid.org says it first happened in June.
Oddly, some students don't even know how much they owe — or to whom.
"I'm scared to know," said Carla George, 20, of Detroit, a junior majoring in biology at Wayne
State University. She knows that her mother, at one point borrowed about $10,000 through afederal Parent Loan for Undergraduate Students. The PLUS loan lets parents borrow for costs
not covered by a financial aid package.
George estimates that she has taken out at least $10,000 in other loans.
"I think it's a whole bunch more," she said.
A college diploma and a good job are supposed to be the payoff for years of hard work in school.
But for thousands of today's students, there's going to be a payback, too — as those loans comedue after graduation.
Some college students are failing financially long before they get a diploma — or a grown-uppaycheck.
"Students are far worse off today with student loan debt," said Alan Collinge, who runs a website
called StudentLoanJustice.org, where students discuss their troubles with college loans.
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With tuition far outpacing inflation for the past 20 years, student borrowing has continued to
grow — a whopping 25% last year. Some students who are borrowing never expected to, but
their parents have lost jobs or suffered other financial setbacks in the recession.
Dramatic drops in home values also have made it far tougher for some parents to cover college
costs by simply taking out a home equity loan.
For many college grads, that monthly student loan payment is turning into quite a scary number.
Kate Baker, 30, pays $600 a month — and has watched less-encumbered friends her age buy
houses, travel and generally enjoy more disposable income.
Baker doesn't regret borrowing huge sums to major in government and urban studies at Smith
College, a private liberal arts school for women in New England. She's convinced that her Smithdegree has given her an edge and could be the main reason she has been employed for the past
10 years — even if, she jokes, she's also going to be in poverty until she's 50.
"As you look longer term, it's scary that my retirement account is basically non-existent," said
Baker, who makes about $50,000 a year as a development director for Wayne State University
Press, and another $5,000 as mayor pro tem for Ferndale, Mich.
What can you do to hold down your debt so you're not digging out of it for years after
graduation?
Get a handle now on "the number" — what you will need each month for loan payments.
If, for example, you have $30,000 in student loans, your could be paying about $350 a month for
10 years — if they're Stafford Loans at a current unsubsidized rate of 6.8% and have 1% in fees.
Including interest, you'd be paying off nearly $42,000.
To swing this without hitting the lottery, you're going to need a job that pays far more than theminimum wage. One estimate, according to a calculator at www.Finaid.org, is an annual salaryof $42,000, assuming you use 10% of your monthly gross for loan payments.
If you start out making $25,000 a year or less, get ready to move back into Mom and Dad'sbasement to make those loan payments.
Candy Wright, group manager credit counseling for GreenPath in Farmington Hills, Mich., said
many young grads are having a hard time lately finding a job that can pay enough to cover theirloans. She warns them to be realistic about borrowing.
A visit to your college career office can provide a look at estimated salaries in your chosen fieldand region of the country.
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OTHER THINGS TO CONSIDERHold down your costs. Evan Rutkofske, 20, who lives with his parents in Grosse Pointe Woods,Mich., took some classes at Macomb Community College last year and was able to transfer 30
credit hours to Wayne this year. He saved a few thousand dollars. Community college can offer achance to save $4,000 or $5,000 up front in the first year of college compared with the cost of abigger university. Depending on where you go and how many classes transfer, the savings could
be greater.
Keep track of your borrowing. Reyna Gobel, 33, said she misplaced information on one of 16
student loans that she took out as an undergraduate and ended up defaulting on one. Some
graduates may not discover that they've got a rogue loan until they are turned down for amortgage or a car loan -- or a collection agency starts calling. Gobel also learned that one badloan means you can't get additional federal student aid for grad school. "Know what you owe,"said Gobel, who lives outside of Dallas and is the author of "Graduation Debt: How to Manage
Your Student Loans and Live Your Life." A form for keeping track of student loans can be foundat www.finaid.org/loans/studentloanchecklist.phtml. You also can access all your federal student
loan information on the National Student Loan Data System website at www.nslds.ed.gov.
Pay now if you can. Sallie Mae came up with a new twist on this idea by launching a productcalled the Smart Option Student Loan that requires that borrowers make at least a fixed paymentof $25 a month while in college. The idea is to keep balances from growing higher each month.
"It's less than a dollar a day," said Charles Rocha, senior vice president for student lending for
Sallie Mae. On a $10,000 loan, it's possible to save about $6,275 in interest -- or about one-thirdof interest charges -- over 10 years. Student borrowers also should exhaust all options for federal
loans before considering private loan programs, such as the Smart Option product.
By: Susan Tompor