Penny for Your Thoughts: Examining Student Loans


The amount of loans and financial aid that UC Irvine applicants receive  from each of their prospective colleges has proven to be a major deciding factor in which college they decide to attend. Many students cannot afford to attend UCI without taking out a loan to pay for tuition, textbooks and other school supplies.


In the 2009-10 academic year, for instance, 47 percent of UCI students graduated with loans averaging $16,878, according to data from the Oakland-based think-tank, Institute for College Access & Success.


As government funding for UC schools is decreasing, that amount is expected to rise.


California’s continuing disinvestment in public higher education has had significant repercussions. This year is the first time  that students paid more toward the cost of their education — about $2.97 billion — than the state contributed, $2.37 billion.


This means that grant values are dwindling, and the amounts offered in loans are increasing.


“The budget cuts will not affect low income students that really need the aid,” Allister Phan, UC Irvine financial aid peer advisor, said. “It will mostly affect the middle class of those making $85,000 to $100,000 a year.”


The expense of taking out a loan through UC Irvine is much less than through a credit company or bank and is designed with the student in mind.”


The option of taking out a loan may seem like a great idea on first consideration, but it has proven to be problematic for many of those who choose to do so.


One reason causing students to think twice about committing to loans is the current unemployment rate, which is approximately 6 percent in Irvine. While the unemployment rate has lowered since 2010, it is still hard for many students to find jobs after they graduate college. Even if recent graduates are able to find jobs, it is doubtful that their earnings will be enough for them to pay off the debt acquired from their loans.


As a result of these loans, college graduates of all ages are delaying buying homes and failing to  save funds for retirement and college for their own kids. In the most extreme cases, college graduates are forced to utilize their their savings or Social Security earnings to pay off college debts. About one out of every 13 Americans of ages 40 and older has outstanding student loan debt, and people 40 and older are responsible for nearly one-third of the nation’s total student loan balance, The Federal Reserve Bank of New York reports.UC Irvine requires students with loans to take part in an entrance and exit interview online to understand their rights and responsibilities as loan holders, as well as to plan current and future finances, according to campus spokeswoman Cathy Lawhon. The university also refers students to an online personal financial tutorial program called CashCourse to help prevent ignorance by students regarding how college loans function.


The ever-rising cost of college tuition has grave, long-term consequences on Americans long after they have graduated and entered the workforce. However, college students of today were raised around an economic depression and have learned to watch carefully over their expenses. Regardless, some students are still making monthly payments on the loans that they acquired years ago. Such difficult circumstances make proper government contribution to public education crucial. Students should certainly be wary of committing to loans and resort to the option only if absolutely necessary. In the meantime, students remaining aware of the economic climate and government fiscal decisions might prevent potential future tuition hikes.