How Are Students Paying For College?

By Eleanor Stanford

Working out how to pay for college impacted every aspect of Alexandra Glorioso’s life, and yet she feels lucky she managed to make it work at all.

It dictated which school she chose (Arizona State University) and how she spent her time at school (juggling numerous sources of funding).

“The numbers don’t represent how sophisticated you have to be to figure the system out,” Glorioso, 27, said.

Attending college in the United States is more expensive than ever. The class of 2012 graduated with an average $29,400 loan balance, according to the Project on Student Loan Debt.

And yet in fall 2013, a record 21.8 million students attended American colleges and universities — an increase of about 6.5 million since fall 2000.

For some students, figuring out how to pay for college takes as much energy as studying.

Eighty percent of American college students hold at least one part-time job, while the amount of money that parents give their kids for college expenses has decreased.

To cover the costs of her bachelor’s degree in economics at ASU’s honors college, Glorioso worked 20 hours a week as a hostess at My Big Fat Greek Restaurant in Tempe during her freshman year, and then as an academic researcher during her sophomore and senior years.

But even that wasn’t enough to cover all her costs. She took out a $10,000 loan to pay for books and received a few hundred dollars a month from her parents.

She also had a scholarship from the University of Pittsburgh because her father was a professor, and for one year that overlapped with a merit scholarship from Arizona State University.

Without that extra, double scholarship cash, she wouldn’t have had enough money to cover her basic costs.

“If I didn’t come from a family where everyone went to college, I probably would have just dropped out,” she said.

Glorioso expected her parents to be able to give her more financial support than the $400-$800 monthly living allowance they did, but their financial circumstances changed.

Glorioso’s struggle isn’t uncommon.

Nearly three-fourths of parents said they were worried about having enough money to help their child with college, according to a survey by Discover Student Loans, a college loan comparison site.

The same survey found that 47 percent of parents thought their children should pay most or all of their college costs, up from 39 percent in 2012.

Heather Jarvis, an attorney and expert in student loans, says this is in part due to a “generational misunderstanding”: parents remember they were able to pay for college with a part-time job and still think this is true for their children. But they’re mistaken.

But as Glorioso found, tuition increased by more than 30 percent between 2000 and 2012, and a part-time job is now just one of many necessary sources of funding.

The growth in federal financial aid has not kept pace with the increase in college tuition in the last few years. This means that even with federal grants such as Pell Grants, students are still paying more than they used to.

Federal Pell Grants are available to undergraduates starting their first bachelor’s degree and is allocated depending on an applicant’s financial need and cost of attendance. The maximum allocation for the 2014-15 year is $5,730.

Heather Jarvis has made a career helping groups navigate this complicated system. “The problem is that the bulk of the financial aid the government makes available is loans, which must be repaid,” she explained. This “debt-based system of access to higher education” also causes complications once students are out of college.

Charmin Guzmán, 23, studied film and TV at Boston University and graduated in 2013. To supplement her scholarship from the university, she worked 40 hours a week throughout college and took out $30,000 in loans.

“Until I graduated, I had no idea the mess I had got myself into with college loans,” she said.

She now blogs for SALT, a nonprofit that helps students repay their loans. Her friends ask her for advice on how to handle their loan repayments.

“There’s a lot of people who don’t know what they signed up for,” she said. Guzmán says trying to make each month’s repayment in the early stages of her film career is incredibly stressful. “That’s what kills you: the worrying.”

Guzmán says Obama’s expansion of the eligibility for income-based repayment plans won’t impact her or many of her contemporaries. It also won’t help any of the students who took out private loans to pay for college, which total over a million a year.

Despite all of this, Guzmán says she wouldn’t do anything differently. “It’s a tough battle, but you can’t let your loans beat you,” she said. “It was the only way for me and for a lot of people to go to school.”

And despite her financial balancing act during undergrad, Glorioso went back to school last year to attend graduate school for journalism at Columbia University.

“If I wouldn’t have gone to such a cheap university, I definitely wouldn’t have been able to take out loans for grad school,” she said.

Heather Jarvis’ top tips for managing the cost of college:

• Everyone should out a Free Application for Federal Student Aid - even if you think you’re not eligible at all. The forms are used by colleges and student aid awards in determining how much money to give students. It’s a key first step.
• Look for sources of gift aid money that doesn’t have to be repaid.
• Be very cautious about taking out private student loans - look at federal student loans first.
• Recognize that it’s important to consider costs. Due to the availability of student loans, it’s easier to assume you can afford a greater college debt then you actually can. Each student needs to assess for themselves their situation.
• People with existing student debt should check out the Department of Education’s Loan Data System. You can login and see you federal loan options. It is a great and very underused resource.

Photo credit: File photo