College student debt on the rise

09.03.09
By Nicholas Storie

With college students around the country beginning the school year, many of this year's class will fall into the trappings of credit card debt to help pay for tuition, books and other expenses. And it appears that the amount of money these students are borrowing is growing faster than ever.

According to the Wall Street Journal, numbers from the U.S. Department of Education show that students borrowed $75.1 billion in federal student loans in the 2008-09 school year. That's a 25 percent increase over the previous academic year and a number that is expected to rise once again this year.

Mark Kantrowitz, a financial-aid expert who conducted analysis for the government's National Postsecondary Student Aid Study, tells the paper that he anticipates the rate of borrowing will slow for college students this year, but expects students to borrow 12 percent more for the 2009-10 academic year.

While many students and their parents are borrowing more because of the rising cost of attending college, some experts say the increasing amount of borrowing is actually giving schools more of a reason to increase tuition.

Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, told the Journal that for many colleges it's "easier to raise prices...because this additional loan amount is made available."

The amount of debt that comes with student loans is only one problem for students as many end up in the hole for massive amounts of credit card debt before they can even enter the workforce. Rules that go in place in February are aimed at cutting down on this credit card debt for college students and will limit how credit card companies can market their products on college campuses. The new laws will also prohibit those under 21 from obtaining a credit card unless it is co-signed by a parent or guardian.

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College students turn to credit cards to help pay for tuition.