A college education can come at the cost of a house, small business or a personal car. While both houses of Congress discuss possible changes to student loans interest rates, more students say getting a job is a better option than going to college and paying steep tuition prices.

The increase in interest rates on government subsidized loans will impact more than seven million undergraduates nationally who are expected to take out loans for the coming school year. Last year, the 3.4 percent interest rate was extended, in midst of an election year. This year, things may not be the same.

Over 15,000 students at the University rely on subsidized student loans annually. As incoming students prepare for new academic year, many are seeing a loan bill that is $17-24 higher per month. 

While this is an added burden for students, many see no other better option.

Chris Keel is a mechanical engineering student. Keel says rising tuition costs and an anemic job market makes his chances of progress low. 

“As a generation with more student debts and high cost of living, it is difficult to manage my limited finances,” Keel said. 

Since 2011, in-state and out-of-state tuitions has increased 4.9 percent and 2.4 percent, respectively. Despite university spending of over $783 million in financial aid funds, many students rely on subsidized government loans. Around 45 percent of students on campus depend on federal loans, both subsidized and unsubsidized. 

Every year, on average, an undergraduate at the University bears the brunt of $6,000 in federal student loans. Where the national debt is at more than $16 trillion and counting, student loan debt has reached $1 trillion.

Mortgaging the future

The subsidized student loans were designed to help low-income students who were unlikely to attend college without them. The Congressional Research Service has estimated an increased cost of $2,600 after the bump in interest rates. Although student loans pale in comparison to the national debt crisis, the failure of Congress to do much has put students across the country in jeopardy.   

The Bureau of Labor Statistics reports that the class of 2012 graduates faced an unemployment rate of 13.3 percent. With the high cost of college education and low prospects of employment, more high school students have started working rather than pursuing higher education. 

Despite drastic increase over the years Charles Mayfield, associate director of Student Financial Aid, said higher interest rate on student loans will not impact enrollment at the university.

“The incoming students will not have an immediate impact of the increase, but they might when they graduate,” Mayfield said. “Although the increase is double, it still is the best available option for most of the students.”

Mayfield explains the government subsidized loans come with substantial perks; students are not charged interest while they are in school, and they can pay them in a period of 10 years. 

Spending wisely

Each year, thousands of graduating students enter a slowly improving economy in which many still find themselves unemployed or underemployed. What once was touted as a key to successful career has become a financial burden. 

Where Senate debates to reach a deal, students need to learn how to spend money wisely, according to Kathryn Sweedler, consumer economics educator. She explained the vicious circle of debt and consumer behavior which creates problems for students.

“Just because your lender gives you more money, (that) does not mean you need to spend that all,” Sweedler said, explaining difficulties faced by students while managing finances. She suggests the students track their spending and prioritize their needs.

There are different programs on campus, including the Financial Wellness program, which teach students to manage their money effectively and make wise financial decisions. 

Sweedler says a college degree and quality education assure success. If students have to take loans, even at a higher interest rate, they should because it will pay them back eventually.

With the purchasing power of financial aid declining, cost of living rising and the rapid expansion of financial services with the growth of technology, personal finance is a life skill that all students should start developing, she said.

Andrea Pellegrini, assistant director in the Financial Services office, said it is important that students are aware of the costs associated with their degree. 

“If you don’t need to take out the entire amount of the loans offered to you, reduce how much you borrow so that you are not paying interest unnecessarily once they go into repayment,” she said.

Taking advantage of free resources while on campus is another way to make the most of one’s experience at the University. The services available through Student Affairs, like The Career Center or Career Services Network, provides opportunities for free education or workshops as well as networking with professionals can really help students accomplish their long term career goals and, ultimately, financial success. 

The increase in student loan interest rate is associated with a number of other problems. 

According to the Consumer Financial Protection Bureau student debt has adversely affected home ownership. As people earn less and have high debt to repay, they have little money to buy land and property. 

High cost of living and unemployment is causing students to move back to their parents’ houses. Census data shows that in 2011 over 6 million Americans between 25 and 34 of age started living with their parents, a sharp increase from 4.7 million in 2007. 

Many students struggle with tracking their expenses. It can be seen as a cumbersome task, but there are so many tools to help students manage their money and plan their spending in ways that work for them. Checking accounts, credit cards and debt are as important to the college experience as books. It is important for all students to know about banking and credit. 

Zara can be reached at [email protected].