As tuition increases outpace the rise in family income, many students find themselves stuck with loans after graduation.
By JJ BowmanAssistant
News Editor
People who say you can’t put a price on a good education may want to talk to some recent college graduates.
After spending years enveloped in the protection of Pepperdine’s beautiful bubble, many students have monthly reminders of their college years in the form of student loan payments, indicating that their education came at a hefty price.
Seaver College tuition this year costs $26,280, an increase of nearly 85 percent since 1990 when tuition was $14,250. However, the median household income in the United States increased 42 percent between 1990 and 2000 from $35,225 to $50,046, according to the U.S. Census Bureau.
Once room-and-board and other fees are added, a year in Malibu comes to $34,300. As a result, many students turn to financial aid to cover part or all of their college expenses. Unfortunately, most of this aid must be repaid despite students’ best attempts to deny the fact.
“I didn’t want to think about (my loan payments),” said Hannah Pierce, a 2001 alumna.
Pierce took a debt of $70,000 in loans along with her Pepperdine diploma. Besides her own Perkins, Stafford and CAL loans, her parents took out a Parent Loan for Undergraduate Students, or PLUS loan.
According to the Office of Admissions, average student debt for Pepperdine graduates is $30,000.
To keep that figure as low as possible, students have to pay attention to both the amount they borrow and how much time they spend in college, said Edna Powell, director of Financial Assistance for Seaver College.
“Time is money in college,” she said.
Powell said many students fall behind on completing their paperwork once they begin college, which can keep them from acquiring all the money for which they are eligible. Students who don’t plan their time in college well also risk compounding their debt by enrolling in an extra semester or taking summer school classes, she said.
Upon graduation, students typically have six months before they have to start making loan payments. Pierce said her monthly payment is $300, although that will increase if or when she takes over PLUS loan payments from her parents.
The most common loans at Pepperdine are Stafford and PLUS loans.
Stafford loans can be subsidized, based on financial need, or unsubsidized for students who don’t qualify for the other loan. Both loans have the same limits. Each year, freshmen can take up to $2,625, sophomores to $3,500, and juniors and seniors can borrow a maximum $5,500.
If students still need more money, they can turn to their mom and dad for a PLUS loan if their parents have a satisfactory credit history. These loans can cover up to the cost of a year’s education after all other financial aid and scholarships are awarded.
Unlike the Stafford loan, which need not be repaid until six months after the borrower has finished college, repayment on the PLUS loan must begin immediately after it is fully disbursed. Typically that occurs after the beginning of each second semester.
A full list of loan options for Pepperdine students can be found on the chart at the bottom of the page.
Because students must take out more as tuition increases, understanding the effects of borrowing becomes crucial.
Joshua Clayton, a 2002 alumnus, had worked hard with his admissions counselor to ensure that he could afford Pepperdine. He said he did not expect to have such a large bill to pay off.
Clayton had more than $83,500 in loans in addition to about $25,000 to $30,000 in scholarships. Because the first payment is not due until later this month, Clayton said he is unsure how much he will have to pay each month.
“It’s definitely a shock and it sucks,” he said about finally realizing the price of college.
Clayton said he underestimated the cost of Pepperdine because his grant and scholarship money reduced each year. Although his freshman year package looked attractive enough to make him believe he could manage four years at the university, each year tuition raised and his scholarships did not.
Right now he works as a valet in Honolulu and lives at home to save extra cash. Clayton said he plans to return to Southern California once he has enough money to live on his own.
After graduation, students who have borrowed from different sources have the opportunity to consolidate their loans. According to the Consolidation Assistance Program, students with $40,000 in loans can save more than $200 per month.
Such programs do not make credit checks — provided students have not defaulted or fallen behind in making payments, they can consolidate their loans to reduce monthly payments.
Students can consolidate right now at an all-time low, as the Stafford loan interest rate is at 3.46 percent. Furthermore, students who consolidate during the grace period after graduation will save more money, according to the Consolidation Assistance Program.
Nevertheless, loans can change students’ ideas about attending graduate school.
Although some see furthering their education as a means to defer student loan payments, others do not want to compound their debt.
“I won’t go anytime soon, or ever,” Pierce said.
She said that if she were to attend graduate school it would be for her master’s in social work.
Clayton also said that graduate school isn’t a practical idea right now. Although he wants to return, he said it will be at least five years before he can find a job that will pay for his graduate school.
Even if graduate school may seem unattainable for the time being, Clayton said the final bill for Pepperdine is worth the sacrifice.
October 03, 2002