A recently released study conducted by the Project on Student Debt found that graduates of public colleges and universities accumulate almost as much debt as their peers at private institutions.
The study found that University graduates from the class of 2005 had an average debt burden of $15,176 compared to $13,890 in 2001. At the University a significant driver of this higher level of indebtedness is private loans, which rose in volume from $2.5 million in 2004 to $6.3 million in 2006 according to Director of Student Financial Services Yvonne Hubbard.
In the state of Virginia, the average public school student graduates with $16,124 of debt, while their private counterparts graduate with $17,817 of debt.
"Student debt overall is rising," said Lauren Asher, director of the project.
The general trend in financial aid has been to award more loans and fewer grants in aid packages, Asher said, although this trend varies from institution to institution. Further, the federal Pell grant -- for low-income students the nation's most widespread grant -- has been frozen at $4,050 for several years. Many families without the aid they need, Asher said.
"Grant aid has not kept pace with families' ability to pay," she said.
Because the costs have been rising and grant aid has not, families are turning to loans in order to pay for education.
"Borrowing fills the gap," Asher said.
Hubbard said many parents are unprepared to pay their expected contribution, and as a result, students take on that debt in the form of additional private loans.
"Students going to school anywhere are opting to take on more debt to help their parents," Hubbard said.
According to Hubbard, in 2005 the average debt from need-based loans issued by the University was $10,500. Average debt, including debt from private loans, in 2005 was $15,176. These loans represent a significant additional burden on students, Hubbard said.
The University's preferred lender is the Bank of America, Hubbard said, and this partnership makes obtaining private loans, which are issued through the GATE loan program, as easy as possible.
"It's a double-edged sword," Hubbard said. Students are able to obtain loans more easily, so they do as a result acquire more debt."
The University has committed to meeting all of demonstrated need through the AccessUVa. program, which is a step towards decreasing loan burdens, Hubbard said, adding that students need to be more fluent in their financial situation.
Currently Hubbard is working on developing a class to make students more aware of their own finances so they can plan for their own future.
"Your credit score should be as important as your graduating GPA," Hubbard said.
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