Debt plagues half of college
graduating seniors
By Kurt Esposito
Assistant
Campus Editor
About half of the seniors graduating from Purdue
in May will graduate with debt.
After the 1999-2000 school year, 50 percent of
seniors graduating from Purdue had debt. The average amount of debt
was $14,874, all of which comes from student loans.
Joyce Hall, director of financial aid, said it
is a national trend for all colleges and universities that students
graduate with debt.
Hall said there has been an increase in the amount
of students graduating with debt since the early '90s because there
has been a shift from federal grants to loans.
It is recommended that after graduating, students
devote no more than 8 percent of their yearly gross income to paying
off student debt. Students have a 10-year window to pay off the debts.
Hall said to avoid accumulating more debt students
should have summer jobs and avoid using credit cards too much.
"I think that’s another area to not fall into
— using your credit card to buy pizzas and personal things because
you'll be paying interest on those if you don't pay them off," she said.
Flora Williams, a professor of consumer science
and retailing, said the problem is that students think it is better
to borrow money and pay it back after they graduate.
"We need to deprogram ourselves from thinking we
can borrow all we can. If you don't have to pay now then you don't have
to pay it back. That's not true at all," she said.
She said students should focus on paying off their
debt rather than worrying about buying a house or a car because employers,
landlords, insurance companies and banks all look at credit history.
"Decisions on long-term debt in college will affect
other decisions," she said.
She said that students should always be thinking
of ways to reduce debt and maximize income.
She said they should be creative when finding ways
to save money. One way is to comparative shop. Williams said it reduces
impulsive buying, educates students about how much they should spend
and saves them money.
Hall said that on the award letter students receive
this year for their loans there will also be an estimate on how much
students should spend on room and board, transportation and miscellaneous
costs. She said this is so students can make sure they stay within a
cost-effective range of spending.
Students can also visit Web sites such as www.sallymae.com,
where they can use practice simulations on how much expenditures will
cost them.
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