The pains of student loans

Student loan repayment. That phrase sends shivers up the spines of many IU students. As they think about the heavy debt they have taken on and the meager incomes they can expect fresh out of school, breaking out in a cold sweat is not unheard of. \nWith the rising cost of tuition at IU and other higher education institutions across the land, the average debt a student accumulates before he or she graduates is only expected to rise. Couple that with the heavy credit card debt many students are tempted by, and you have a catastrophe waiting to happen. Right?\nNot necessarily. In the latest announced numbers on student loan default rates, only 5.2 percent of people who started paying their loans back in 2002 have defaulted. That default rate is among the lowest on record, and a far cry from the high watermark of 1990 when the rate stood at 22.4 percent. \nEven so, the average college student is graduating with $18,900 in student loan debt, and an additional $3,262 in credit card debt. Recent graduates today can expect to spend up to 15 percent of their income on repaying those loans. And while default rates remain low, a recent report by the College Policy Institute argues, "Interest rates are an especially crucial variable in predicting how well students will be able to cope with their debt." With interest rates expected to slowly rise in the next few years, we can expect the student loan default rate to follow it. So what is there to do?\nWe believe that the price of a quality education is high, and students should be expected to shoulder some of the burden in paying for that education. Many European and Asian governments are finally bowing to the worldwide perception that American universities are the best in the world, and are moving toward emulating our current system. The quality our schools enjoy can be directly traced to the wide array of funding sources, including student fees available to American universities that other schools often lack.\nAt the same time, we believe that the University and the government need to take action to ensure that a potential problem doesn't bloom into a real catastrophe. The government needs to commit to the fact that a well-educated work force is the key to maintaining American productivity, and needs to devote more resources toward keeping the costs of a college education affordable. The University needs to likewise recognize the potential problems that can develop from its students incurring debt, and should offer readily available credit counseling to students and recent alumni alike who find themselves having difficulty in managing the debt they acquired as students.\nIs there a crisis looming? We can't say for sure, and neither can the experts. But if there is anything we have learned in the last few weeks, it's far better to prepare for a crisis that might never come than it is to ignore it, and just hope the decision doesn't come back to bite you.