Student debt steadily rising with fee hikes

By Tracey Robertson

Rebecca Gile, a senior psychology student, looks forward to life after Fresno State. She is eager to find a job and start earning a decent salary. Unfortunately, Gile is part of a growing number of college graduates entering the world with a wallet full of debt.

Gile, like many students at Fresno State and across the nation, is now shouldering the burden that comes from several years of impulsive spending and the ever-increasing costs of a public, post-secondary degree.

The problem for Gile started her freshman year when she was offered a credit card on campus. Before her junior year, the now-23-year-old mother of two had been approved for five additional cards. Her current credit card debt totals $6,000.

Gile and her husband have been conscientious about paying down her remaining cards but it has come at a price. They have been unable to consider buying a house and have been able to save only a small amount of money for their children.

“ Even if we manage to save a little, our payments toward the debt seem to offset whatever we put aside,” Gile said. “You really can’t say that you’ve saved anything when you still have debt.” She has incurred an additional $17,000 in student loan debt so she can finish school despite her financial challenges.

Gile’s situation is not surprising to Martha Lucey, president and C.E.O. of Consumer Credit Counseling Service of Central Valley, Inc. She said Gile, and young people like her, are exactly the kind of customers credit-card companies are looking for.

“ The typical college student today has over $2,500 in credit card debt alone,” Lucey said. “More students than ever carry credit card debt and the debt is higher than it has been in the past.” Student credit-card debt averaged more than $1,800 per person in 1999.

In the summer of 2001, the California legislature approved a bill that urged universities to adopt stricter policies regarding how credit card vendors pitch their products to students. Fresno State responded by raising the fee for vendors on campus to $200, limiting the number of days each company can promote to students and prohibiting the use of gifts to students who apply for cards. That just means the credit companies are becoming more creative and aggressive about marketing to young people, Lucey said.

“ If credit-card companies can get students hooked at an early age, they know they will have a customer for life,” Lucey said.

But credit-card debt only represents a small fraction of the problem for college students. The majority of student debt, according to information from national loan provider Nellie Mae, comes in the form of student loans.

The results of a 2002 Nellie Mae National Student Loan Survey indicate that loan debt is up 66 percent in the past five years and that the national average for undergraduate loan debt now stands at more than $16,000.

According to the most recent figures from Fresno State’s Financial Aid Office, 40 percent of students in the 2001-2002 academic year borrowed through one of the existing loan programs. The average Fresno State student debt upon graduation was $14,228 for the same year.

Jerry Loheide, assistant director of the Financial Aid Office, wrote his master’s thesis on student debt. Through his research he discovered that, while Fresno State students tend to carry less debt than the national average (likely due to lower tuition fees), the numbers are rising at rates comparable to national trends.

“ It has been really surprising to see how rapidly the debt has climbed,” Loheide said. “The figures are alarming enough without even calculating for the effects of the recent fee increases. I can only imagine what the numbers will look like a year or two from now.” Loheide cited rising education costs including tuition, books and parking as possible reasons for the climb.

Rising education costs and a history of impulsive spending have senior journalism student, Ashley Taylor, worried about her future. By her own estimates, Taylor is $4,000 in debt as the result of purchases made on cards from Macy’s, Sam’s Club, The Gap and Victoria’s Secret. She also carries a $2,500 student loan that she plans to use to consolidate her debt.

“ I was motivated by a desire for a certain lifestyle,” Taylor said. “My friends and I thought that if you wanted something, you should have it.” It was a credo that has proven costly for Taylor during the course of her college career.

“ My only saving grace was that my credit limits were low,” Taylor said. “If the limits were higher, my debt would be higher. I never thought I would be the kind of person who had creditors calling her.”

Making progress toward a debt-free future is not easy, but it is possible, Lucey said. Both Gile and Taylor took the first step toward repairing their credit when they stop charging. They are also working to pay off high interest credit cards and consolidating their remaining debt.

“ There are plenty of good reasons to establish credit when you are young. It is important to have good credit when you want to rent an apartment, buy a car, or purchase your first house,” Lucey said. “But it is also important to exercise restraint when using credit. The spending decisions young people make today will have a substantial impact on their options for the future.”