A recent national study shows college graduates are burdened by an increasing level of student loan debt – but Polk State College is avoiding that trend.
In fact, more than 90 percent of the College’s 2009-2010 graduates did not take student loans.
The Institute for College Access & Success recently released a new report from its Project on Student Debt. The numbers showed that two-thirds of 2010 college graduates held student loans. The average amount of their student loan debt was $25,250, an increase of 5 percent from 2009.
Of the more than 1,000 colleges included in the report, 73 colleges reported that more than 90 percent of their 2010 graduates had student loan debt. Ninety-eight colleges said their 2010 graduates owed an average of more than $35,000 in student loans.
In Florida, the study showed that 49 percent of 2010 college graduates held student loans and the average amount of debt was $21,184.
Meanwhile, 93 percent of Polk State’s 2009-2010 graduates did not owe student loans. Of graduates who did have student loan debt, the average amount was $8,265.
Polk State Director of Financial Services Marcia Conliffe attributed the low number of student loans to a few factors.
For one, at $103 in tuition and fees per credit hour, Polk State is the most affordable higher education option in Polk County. Additionally, many of Polk State’s students qualify for federal, need-based Pell Grants. For example, 30 percent of 2009-2010 graduates qualified for Pell grants at some point during their college careers.
Conliffe added that financial aid officers also work with students to exhaust all “free money” options – such as scholarships and work-study programs – before loans are sought.
To help Polk State students potentially further decrease their education borrowing, Conliffe is preparing a financial literacy and student loan default prevention program.
“There’s nothing wrong with borrowing, but you have to do it responsibly,” Conliffe said. “The program will help students to understand the responsibility that comes with taking out loans.”
The nationwide trend of increasing student loan debt comes at a time when the unemployment rate for new college graduates is the highest in recent history. The Project on Student Debt, based on data from the Bureau of Labor Statistics, pegs unemployment for new college graduates at 9.1 percent.
Carrying a large load of debt – and then struggling to find a job to pay the bill – sets new college graduates up for further financial setbacks.
“Anecdotal evidence and prior research shows that carrying a significant amount of debt affects decisions like when to buy a house or a car,” said Matthew Reed, program director for the Oakland, Calif.-based Institute for College Access & Success.
Greg Littleton, president and CEO of Lake Wales-based Citizens Bank & Trust, agreed.
“The effect that debt has on a student post-graduation is huge. It most certainly hinders their financial abilities upon graduating. It may well force their hand to delay purchasing a home, and even smaller purchases like cars. Generally speaking, a person’s earning potential is at its lowest level when they first enter the job force. Couple that with large debts left from school loans and they will have a difficult time with taking on any additional debt,” he said.
The availability and terms of car loans and mortgages are tied in large part to one’s debt-to-income ratio, said Bud Stalnaker Jr., president, CEO and chairman of Dade City-based Florida Traditions Bank. If one’s income is high enough to sufficiently offset the student loan debt, then making big purchases like houses and cars may not be a problem.
“But in this economy, it’s tough to find a job,” Stalnaker said.
The Institute for College Access & Success’ report on student debt focused on graduates of public and private nonprofit four-year colleges who had federal and/or private student loans.
Polk State College offers a limited number of bachelor’s degrees in carefully targeted, high-demand fields, in addition to associate in arts, associate in science and associate in applied science degrees in a broader range of disciplines.
An additional, important dynamic has been noted by Polk State’s chief academic officer, Dr. Kenneth Ross, who points out that Polk State students routinely transfer to the state university system – by and large free of student loan debt – and have historically maintained GPAs that match or exceed those of students who begin their college careers in a state university.
According to the Florida Division of Colleges, the average cumulative GPA for those students who transfer to the State University System from the Florida College System, as well as those who begin in the SUS, has hovered at 3.0 since 1994.
Seventy-five percent of Polk State transfer students go on to pursue bachelor’s degrees at the University of South Florida. In 2009-2010, 64 percent of Polk’s transfer students to USF registered a GPA of 3.0 or higher. That compares with 58 percent of students who began their careers at USF, and 53 percent of transfers from other FCS institutions.
According to Ross, “We are proud of our students and the success they have earned, and we are proud of a community that has consistently valued the availability of affordable, excellent higher education, close to home. There’s hardly a better gift we can give to the local economy than a well-educated, financially responsible citizen.”