Idaho 2nd Highest Student Debt In The West.
The recent survey conducted by the Project on Student Debt spells a sobering reality for Idaho's students and families. Idaho's average student debt of $26,622 ranks second highest amongst states west of Louisiana -- only Montana had a higher debt total amongst graduating seniors at $27,568.Â
Those Figures Might Be Optimistic
The number of students graduating with student debt from our four-year institutions is the highest in the West at 68% reflecting dwindling state appropriations often used towards scholarships and the economic realities facing Idaho’s working families.
Even worse, the reported student debt figures dramatically underrepresent the total student debt load taken on by students and families. These student debt figures include only Stafford student loans taken by students – capped per student at $31,000 over the course of five years.
So, if an education costs more than $31,000, as it so often does, what happens? Students have the option of pursuing private student loans or having parents cosign for ParentPLUS loans for the remainder. Again, additional debt accumulated by means of private student loans and ParentPLUS loans ARE NOT included in student debt reporting by the regents not only in Idaho, but nationwide.
A Mortgage Without A House
Our students walk in to the workforce carrying mortgage sized payments, no house, no assets, and slim opportunities in an economy that has recovered all too slowly for so many. In many regards, it’s worse.
For one, the interest rate on a federal student loan is 4.29% -- which does not sound too bad. However, it is worth noting that the interest compounds daily leaving us with a real annual interest rate several points higher. Furthermore, the average interest rate on ParentPLUS loans, often used to cover the majority of student expenses for non-scholarship recipients is 6.84% which, again, compounds daily.
Second, unlike a bad mortgage, one cannot simply walk away from an underwater student loan. Student debt is non-dischargeable in bankruptcy, it stays with our kids for life, and if they fail to pay the costs are enormous: (1) the debt amount can quickly double due to penalties; (2) wages can be garnished; and (3) any prospects for regular employment or homeownership are quickly dashed.
In effect, our students’ only option is to both pay for their college, and, effectively, to pay an added tax included by the federal government in the form of student loan interest and penalties. And make no mistake, these student loan interest payments are a tax – you can’t walk away from them and over the life of a loan students typically pay 1.5 times the principal amount in interest alone.
That Is The Reality Unless:
1. We put an end to these tuition hikes; and
2. We Restore state support for higher education
The consequences for the state of Idaho, her economy, her residents, and an entire budding generation are too great to look the other way. The time needs to be now. It really cannot go on much longer.
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