Time to get smarter about student debt

With college costs still rising too fast and family incomes mostly stagnant, it’s worrisome but not shocking that student debt crept toward an average of $30,000 in the latest definitive survey.

Almost seven in 10 college graduates in the class of 2013 had taken out student loans, according to the Project on Student Debt at The Institute for College Access & Success. The average debt for these students was $28,400, which was 2 percent higher than in 2012.

Missouri and Kansas are below the national average, but not by much. In Kansas, 65 percent of students graduated with an average of $26,229 of debt in 2013. In Missouri, 63 percent of students graduated with debt, and the average was $24,957.

The numbers would be even worse if the report included for-profit colleges, where students borrow larger amounts and are more likely to obtain risky private loans than their peers at public or private nonprofit colleges and universities. The for-profit schools aren’t included in the report because virtually all of them refused to disclose their data.

The best remedy for the student debt problem is to reduce the amount students and families are expected to pay. Nationwide, state spending on public colleges and universities is nearly 25 percent lower than before the 2008 recession. Schools still need to do more to rein in costs.

But most students will continue to need some sort of financial aid, so as a nation we have to get smarter about it. High schools and colleges can do much more to educate students and families about the costs of college and the best ways to pay for it.

According to the report, about one-fifth of the debt incurred by 2013 graduates is from private loans, which operate much like credit cards. Interest rates are highest for those who can least afford them and can fluctuate. About half of the students who took out private loans hadn’t used the maximum available to them in safer federal student loans.

The report recommends that Congress require colleges to counsel students before they take out a loan and to notify them about repayment options as they are about to depart.

Schools shouldn’t need a law telling them to do this. But too many students leave college unaware of new plans that limit federal college loan payments to a percentage of the borrower’s income and offer a discharge date after a number of years.

College is all about knowledge, but most students still don’t know enough about the life-changing financial obligations that come with student debt.

This story was originally published December 6, 2014 at 5:21 PM with the headline "Time to get smarter about student debt."