UGA Students Have Less to Fear From Debts

In a tough economic climate, many graduates are feeling the pinch.

University of Georgia students could be safe from a financial trap that others are falling into nationwide.

The trap stems from the traditional belief that a college education is worth a massive financial burden in the long run.

The common wisdom of past years has been simple and successful: a student could afford to go tens of thousands of dollars into debt because a secondary education would all but guarantee
them a much higher salary than they would have otherwise.

A combination of new economic trends caused by the recession is complicating this long-standing arrangement.

Foremost among these factors are the rising costs of tuition, living and debt.

The cost of being a student at the University of Georgia, including tuition and fees, has increased nearly $300 in the past year to $7,530 for in-state students and $25,740 for out-of-state residents.

While this sounds pricey, the Princeton Review still listed the University ninth place overall in its “Best Bang for Your Academic Buck” ranking.

Bonnie Joerschke, director of financial aid at UGA, said the average debt of a graduating senior at UGA with loans last year was about $13,000. Some graduate students can build up several times that amount.

This is still significantly less than the national average of more than $23,000 reported by FinAid.org.

“Georgia students in general have much lower debt burdens than the national average because of HOPE,” said Lee Maddox, an advisor at the Student Financial Aid Office. “Also, [the University] just has relatively lower prices in general.”

In addition, the unemployment rate for recent University graduates has risen from about 3.1 to 4.9 percent in the past year. This is slightly higher than the national average for college graduates but still significantly lower than the national average of almost 10 percent for all people.

The difference is that while other people who don’t attend college might be less likely to have jobs, they also don’t have huge debt burdens caused by the costs of higher education.

The combination of rising costs and decreasing employment causes a perfect financial storm. Higher prices raise debt, which can’t be paid off without income, thus causing greater interest payments and spiraling debts.

The situation has caught many recent graduates off guard.

“I was sure that, you know, I’d have something going by now,” said Kari Thompson, who graduated with a degree in advertising from UGA last spring. “I had a couple of places that I kind of had a relationship with withdraw their offers because of the recession.”


She now has two part-time jobs in Atlanta and works to make ends meet and pay off her only major debt, about $9,000 in student loans.

Because UGA students have relatively low debt they should come out “OK for the most part,” said Jim Verbruge, a finance professor.

“Twelve thousand dollars sounds like a lot, but it’s really pretty manageable for most college graduates,” he said. “The problem comes when they live extravagantly in college and don’t control their expenses and end up with way more debt than average. Or if they graduate and something happens to add huge costs, like having a child.”


He wasn’t so optimistic about graduates from other, more expensive schools. “It’s going to take some of these people 25, 30 years to pay off their student loans, especially if they can’t get a job now,” he said.

Despite the risks in a questionable economic climate, many University students are unconcerned about their student loans.

“I don’t really worry about it,” said Dennis Nichols, a junior who has received $7,000 in student loans so far. “I don’t think I’ll have to [take out any more loans]. And I’m confident I’ll be able to get a job when I graduate.”

If the economy begins to recover, recent UGA graduates could be much better off as a whole than others around the country.“We’re starting to see some signs of a turnaround for whatever reason,” said William Lestrapes, an economics professor. “But there will be lingering affects [of the recession] for months or even years to come. Either way, it’s obviously better to have less debt and better credit, to pay less on interest. That’s a lot of money that could be spent on other things, or saved.”