Debt to some degree

Mar 7, 2010 — The Indianapolis Star

Dana Hunsinger

Mar. 7, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- James Garner is one of those lucky college kids whose parents have helped finance his education.

But his luck may have run out.

After struggling through a shaky economy, his mom -- who took a 30 percent pay cut after being laid off last year -- and dad aren't able to pitch in as much anymore.

With a year of college left, Garner may have to do what he hoped to never do: take out a student loan.

"I was hoping to be able to make it because it's just going to be a lot of debt," said the 22-year-old sales management major at Purdue University. "I've been applying for a bunch of scholarships just waiting, but I think the time may have come."

Garner's need for financial help is a growing trend among all types of college students as parents hurt by the recession can no longer help out, laid-off workers go back to school to update skills and college graduates who haven't been able to find a job enter graduate school instead.

Wednesday marks Indiana's deadline to apply for financial aid. The process will allow Hoosier students to learn their eligibility for grants, scholarships and on-campus work and qualify them to apply for federal student loans.

Since the recession took hold, the number of Indiana students applying has skyrocketed, jumping 42 percent from 296,224 in 2006 to 421,768 in 2009, according to the U.S. Department of Education's office of Federal Student Aid.

Loans also have increased. Sallie Mae (NYSE:SLM) , for example, originated $21.7 billion in federal student loans in 2009 -- up 21 percent from 2008.

At Ball State University, student federal loan amounts skyrocketed 68 percent in the last quarter of 2009 to $5.5 million, compared with two years prior.

"With the economy, unfortunately, people have less money to spend," said Edie Irons, with the Project on Student Debt, a nonprofit initiative to make college more affordable.

"Unemployed people are trying to get new skills and weather out the bad economy in school. Graduating people are turning to graduate school because they can't get a job. Unfortunately all these things are causing people to incur more debt."

College debt is at an all-time high. About 1.4 million people graduated from U.S. colleges in May, and more than half have debt.

The total obligation is estimated at $32.5 billion, a record level for college loan debt, according to the project. Indiana ranks 17th in the nation for college debt, with 60 percent of college seniors graduating with some debt and the average student owing $21,283.

Tom Weede, vice president for enrollment at Butler University, said loans have been an important part of college financial aid packages for the past 50 years.

Recently, Weede has noticed that parents who in the past would have taken money out of their home equity are turning to student loans instead. He also has noticed students wanting loans to go to graduate school.

"It makes a lot of sense," he said.

"If you were thinking about going to graduate school in three or four years anyway, if the job market's down, why not go now?"

The Indiana Commission for Higher Education has been working for the past few months to make students aware of the financial help available to do just that.

The new initiative, called Cash For College, educates students on Wednesday's deadline and how to apply for financial aid. After all, the aid is available, said Elizabeth Crouch, a commission spokeswoman. The state has $250 million to disburse this year, and the federal government has $83 billion.

"So many people need aid right now, and we want them to be aware there is plenty out there," she said.

And that deadline is important because it concerns not just financial aid but lets students know what scholarships, grants, loans and campus work are available. And in some cases money is limited.

At the University of Indianapolis, applications have ballooned, said Linda Handy, director of financial aid.

"I think it's partly from the economy and partly because people just feel a need today, as college costs rise, to have some extra help," she said.

Statewide, colleges and universities are expected to boost fall tuition rates anywhere from 4 percent to 6 percent.

At UIndy, more than 80 percent of students receive some type of financial assistance to pay for the university's $20,970 yearly tuition.

Marty Curry wouldn't have been able to afford that.

Instead, when she was laid off last year, she applied for financial aid for a program at Ivy Tech that focuses on health-care administration.

"I had searched and searched, and I couldn't find anything," Curry said.

But the nine-week program, which she completed in November, already has landed her a job at Community Hospital East.

The grant she received shows it was worth taking the time out to apply for aid.

"It's been so great," she said.

Call Star reporter Dana Hunsinger at (317) 444-6012.

Newstex ID: KRTB-0095-42648984