Texans Among Biggest Borrowers
As the cost of a college education continues to rise, parents and students are borrowing more than ever. New data from the federal government shows total student loan debt in the U.S. rose by $42 billion in the third quarter, to a tally of $956 billion. A large portion of that debt is being borne by Texans. "Texas students historically have used federal student loans, proportionally, to a larger extent than other forms of paying for their education," says Christina Turloni with Texas Guaranteed Student Loans, or TG. She tells KTRH that, on average, about two-thirds of the money borrowed for college in the Lone Star State is through the federal government.
The amount of federal student loans has grown sharply in recent years, since the federal government took over direct lending for most student loans from individual banks. About 93% of student loans last year came directly from the federal government through the Department of Education, as opposed to private lenders like Sallie Mae. With the feds already facing a $16 trillion dollar deficit, nearly another trillion in student loans may be cause for concern. But Turloni points out that, unlike many other types of loans, student loans cannot be discharged in a bankruptcy, so the vast majority of them are paid back. "(The number of) actual defaults is roughly ten to fifteen percent across various schools and various states," she says.
All of these numbers can be imposing for parents preparing to send their students off to college, but Turloni recommends doing plenty of research on costs and payment options before sending off applications. For instance, private schools are much more expensive than public schools. TG shows that Rice University is more than double the University of Houston in total annual cost. However, Turloni says some expensive private schools may offer more loans, grants, or scholarships to make up that difference. She also reminds parents that there are other options, including grants and scholarships, besides borrowing money for school. "Look at all of your options, as well as federal student loans," she says. "But if you're going to borrow, only borrow what you absolutely need."
Check out TG's fact sheets on all Texas schools here.