Under President Bush's new budget, college grants for low-income students would rise. But the bad news is that grants for middle-income kids would probably shrink. To make up their losses, kids in the middle would need larger loans.
It may surprise you to learn that loans in general aren't as burdensome as they sound. Some college graduates do indeed buckle under the strain of repaying their debts. But continuing studies show them to be a distinct minority. The majority take student-loan repayments in stride.
The Consortium on Financing Higher Education (COFHE), representing 33 high-priced colleges, has surveyed the seniors who graduated from its institutions in 1982, 1984 and 1989, with a five-year follow-up on the class of '82. The results so far: No major negative effects of borrowing, either on graduating seniors or on alumni.
On the contrary. The students reported that loans helped them go to schools that they otherwise couldn't have afforded.
In the latest COFHE study, a majority of graduating seniors said that their debts had no effect at all on their decision to go to graduate school, the types of jobs they took or their marriage and family plans.
Slightly more than half of the students said their loans caused them anxiety. But to what extent are these complaints reasonable, in view of the graduates' earning prospects? It may be, says Larry Litten, COFHE's associate director, that "loan debt succeeds the food in college dining halls as the focus of some ritualized complaining."
To the extent that loans did appear to be a burden, those chiefly affected are the minority who borrowed for both undergraduate and graduate degrees. But those borrowers have not yet begun to realize the full salaries that their higher degrees are likely to bring. As soon as a doctor, say, gets his or her practice together, the size of the debt will be less forbidding.
Similar results were reported in 1988 by economist Sandy Baum of Skidmore College in Saratoga Springs, N.Y. She studied students in Massachusetts for the New England Education Loan Marketing Corp. and the Massachusetts Higher Education Assistance Corp. Two-thirds said that loans were highly important to their ability to attend school.
About one-third reported a significant hardship in repaying their loans. But for most, that hardship seems more in the mind than in the lifestyle. Students with high loan repayments, Baum found, were just as likely to live apart from their parents, buy a car and buy a house as students making lower payments.
Baum is currently updating her study. Preliminary results suggest that three-quarters of the students now rank loans as highly important to their college careers. "They say they don't like paying back, but would borrow the same or more if they had to do it all over again," Baum says. The average income, for students who graduated from 1985 to 1989: $23,000. They're paying an average of $120 a month on a total average debt of $8,200.
This is not meant to denigrate those who do find it hard to repay. Of the students who dropped out of school, half said that concern over borrowing contributed to their decision, Baum reports. About 7 percent of the students from four-year schools default on their loans. So do 18 percent of those from two-year community colleges.
There also is new evidence that a reluctance to borrow holds some people back from college. A soon-to-be- published study by Ruth Eksgrom, senior research scientist at the Educational Testing Service in Princeton, N.J., asked high-school seniors whether they were willing to borrow to go on to school, and then tracked what they actually did. Those who feared loans were more likely to delay college, choose lower-priced schools or not go at all.
The heartening news, says Eksgrom, is that students who knew about financial aid were more likely to attend college, loans or no loans. So get out the word. Higher education is still worth its price.