Students carry heavy debt loads.

Byline: GREG BOLT The Register-Guard

Many college students now rack up more than $20,000 in debt by the time they earn a degree, and more students than ever are graduating with both a diploma and unmanageable loan payments, according to a new nationwide study.

Not only is the debt load rising among college students, but more students than ever also are using loans and credit cards to finance both their educations and their living expenses, the survey says. Loans alone leave almost two-thirds of all students about $17,000 in debt on average, and half of students who take out loans also leave college with an average credit card debt of more than $3,000.

"Too often, debt burden becomes a ball and chain for student borrowers after graduation," said Lisa Roberts, a University of Oregon student with the Oregon Student Public Interest Research Group. "Many student borrowers are taking on unmanageable levels of debt to finance a higher education."

Statistics on student debt were compiled by the U.S. Department of Education's National Center for Education Statistics. An organization of state public interest research groups analyzed the data and released a report Thursday.

The figures show that the amount students owe on federal student loans has almost doubled during the past eight years, rising to $16,928 in 1999-2000 from $9,188 in 1992-93. Over the same period, the percentage of students who take out loans to pay college expenses has risen from 42 percent to 64 percent.

Of those with loans, 39 percent graduate with what the loan industry characterizes as unmanageable debt. That's defined as monthly payments that exceed 8 percent of a person's before-tax income.

Elizabeth Bickford, director of student financial aid at the UO, said the average debt among students at the campus mirrors the national figures for those in four-year programs. Students in five-year programs, such as architecture, education and some music programs, usually graduate with even higher debt because it takes longer to earn their degrees.

Larry Smith, who directs the UO Career Center, said not only are students running up substantial debt to get a degree, they're doing it while working part-time jobs to keep from going deeper in the hole. He said 70 percent of UO students work part time during the year to help pay for their education and living expenses.

"Students are hard-working," he said Thursday. "I think sometimes there's this myth that college is all fun and games and not much work, but that's not been my experience."

Rachel Pilliod, a sophomore pre-medicine and political science major, said she's working 20 to 30 hours a week at two jobs while carrying 18 credits this term. She's trying to stay out of debt at the UO because she knows she'll have to borrow a lot to get through medical school.

She said federal Pell grants - the mainstay of college financial aid - haven't kept up with the rising cost of tuition. Pell grants used to cover 84 percent of the cost of tuition at a public university but now cover only 39 percent.

"As the cost of tuition has increased, not only are loans and grant funds staying static, some are going down," Pilliod said.

Another rising problem is credit card debt. Young people are bombarded with credit card offers as soon as they turn 18, and many college students with little experience handling their own finances find the temptation of easy credit too hard to resist.

According to the NCES survey, 41 percent of graduating seniors had credit card debt, with the average balance just over $3,000. Among students who had college loans, the number with credit card debt rose to 48 percent and the average balance was $3,176.

College financial aid officials are alarmed at the rise in credit card debt and are looking for ways to better counsel students about the pitfalls of easy credit, such as high interest rates and damaged credit ratings. One problem is that while some students use their credit cards for basic necessities such as textbooks, groceries and utility bills, an unknown number are also using them for things such as cell phones, electronics and expensive clothes.

"If we were to ask our students, you would see them fall out on both sides," Bickford said. "Some will use credit cards to buy groceries, but we also know students will use their credit cards for things not necessarily an educational expense. Bottom line, it comes down to managing their spending and learning to live within their means. For a lot of our students, this is the first time they've had to do that and they find it's very easy to get into trouble."

The UO is working on a plan to help address the credit card problem. Working with the Oregon Student Assistance Commission, the university will begin training administrators and counselors outside the financial aid and business offices how to talk with students about finance and credit issues so more students get the word before they start charging.

The public interest research groups are pushing reforms on a national level. They want to see the maximum Pell grant increased $500 to $4,500, congressional approval of a bill that eliminates certain student loan fees and a tax credit of up to $1,500 for interest paid on student loans.

The run-up in loan debt is worse among low-income and minority students, and Roberts said federal action is needed to keep college education affordable.

"Congress should take immediate action to protect these students from dangerous debt burden by increasing grant aid funding and making student loans more affordable," she said.