For the first time in the United States, student loan debt has surpassed credit card debt. According to Finaid.org, total student loan debt reached $850 billion outstanding in June, and in July the Federal Reserve reported that consumers owe about $828 billion in revolving debt.

These student loans are a concern to many students at OU, where over $85 million in federal loans was dispersed in the 2009-2010 school year. The average loan per student was $8,400 last year, and generally increases each year.

Health sciences major Amanda Coffey uses student loans to pay for all of her tuition and estimates that she will owe about $100,000 by the time she graduates. Her part-time job at Charlotte Russe doesn’t come close to paying for her courses.

“It basically just covers gas and food,” Coffey said. “I don’t make enough to pay for anything else.”

Jennifer Van Vliet, an English major, is in a similar situation. Her full tuition scholarship ran out after four years and now she is faced with paying for college on her own. She isn’t surprised that student loan debt has exceeded credit card debt.

“I do think it’s an interesting new trend that has happened in the United States,” she said. “On one side, it’s actually almost a positive thing because credit card interest is a lot higher than student loan interest is, and also a lot less reliable. The interest on student loan debt tends to stay the same whereas credit card debt doesn’t.”

Economics professor Ronald Tracy attributes the trend to tuition costs rising faster than inflation, especially for private and for-profit universities, and expects the debt to continue rising.

“Why wouldn’t it?” Tracy said. “A college education is worth $1 million more in income than a high school degree. Therefore it’s a good investment. Unfortunately, the federal government is investigating the for-profit schools because they feel that the students may not be getting what they paid for. This is the fastest growing segment of the post-high school market.”

Tracy believes that many students are borrowing more than they need for school, contributing to their financial aid total.

“Although students work more today then ever, studies have shown that most of what they earn goes to support their lifestyle,” he said, and not their education.

Despite increased saving due to the economic recession and unemployment, we may still not be saving enough. Tracy estimates that the average U.S. consumer saves only about 6 percent of their income.

“This, by the way, is one reason unemployment has not improved a bit faster,” he said. “We are the most consumption driven economy in the world. Therefore it is not surprising that student debt is also growing. Students are a reflection of society.”

The interest rate for Federal student loans ranges from 4.5-6.8 percent, and repayment generally begins after graduation. However, there are many ways to defer payment, including public service and continued education.

Van Vliet is in the final stages of interviewing for a job through AmeriCorps which would provide her with an education grant to help pay off some of her loans.

“I will hopefully be working in a conservation corps,” she said. “That will entail living out in the backcountry of Arizona for 3-4 week periods at a time, building trails and fuel reduction and fire prevention.”

The maximum time to repay a student loan is 25 years, but borrowers can select a repayment schedule to best suit their financial situation.

“If a borrower is unemployed, has an economic hardship, is serving on active duty in the military or can’t meet the loan repayment obligation, the borrower can receive time periods of deferment or forbearance that allow loan repayment to be postponed,” said Cindy Hermsen, Director of Financial Aid.

Receiving a deferment or forbearance is not automatic, and borrowers must contact the Direct Loan Servicing Center in order to discuss the different options. One of the best ways to avoid a situation like that is to limit spending and borrowing from the very beginning.

“Live at home or in the dorm,” Tracy said. “If you must have a car, almost a necessity at OU, a six-year-old car with no payments is a much better choice. If you work, try and save some of the money so that you can begin paying off your student loans as soon as you graduate.”

For more information about your financial aid options, contact Financial Aid department in person at 120 North Foundation Hall or by phone at 248-370-2550.