Monday, June 19, 2006

Across the nation, those facing student loan debt are thinking about payday loans. This is especially true for recent graduates in Utah.
Recent reports show that student debt is at an all-time high in that state - and students are in for another hit on July 1 when interest rates go up. The rates on existing loans will rise 1.84 percentage jumps and rates on new loans will go up from the current 5.3 percent to 6.8 percent.

Education leaders worry that the increasing tuition and growing debt are pricing some students out of higher education and causing others to bypass lower-income careers, such as teaching and social work, for higher-paying jobs so they more readily can pay off their loans. Moreover, the payday loan issue can't help but be raised.

"You have to go on to get a graduate degree to be marketable, but I didn't feel comfortable with the debt I already had to get further into debt,'' said Brigham Young graduate Max Hunsaker, 24, who owes $15,000. "I want to have it paid off. It's kind of the motivation for all the decisions I'm making right now.''

In Utah, the average debt on a bachelor's degree is about $14,790, a 45 percent increase since 1995.

"There's some growing trends that because of the costs, people have to look at what is the major that's going to help me pay this back, which is not especially good for society,'' said David Feitz, associate executive director of the Utah Higher Education Assistance Authority. "If somebody has $80,000 in debt and they have an MBA degree, we don't worry too much about them. But if they're going into elementary education, those borrowers are the ones we have concerns about."

What is one of those individuals to do? Some consider online payday loans. Others take on more than one job. Others ask parents for help.

Feitz attributes the overall debt increase to tuition hikes. Total tuition and fees at the University of Utah have shot up more than 60 percent in the past 10 years. At the same time, the amount of aid money offered through federal grants has remained stagnant.

It's a dangerous combination. Ideally, no one would need a cheap payday loan in order to afford an education. These days, however, money is tight.

This entry was posted on Monday, June 19th, 2006 at 1:46 pm and is filed under Consumer Debt, Utah.