Teisha Hood is worried.

Hood, a senior at SMU, will owe a sum equal to a new car instudent loans upon graduation. One of her concerns is finding agood job so she can pay off her debt.

“The loans I received helped me experience the bestmoments of my life,” she said. “But the drawback is sixmonths from now when I must pay back the financial support Ireceived as an undergraduate student.”

Hood is not alone. Student loan debt has increased significantlyin recent years.

In a survey conducted in 1997 by the student loan company NellieMae, students graduating from a four-year university owed anaverage of $11,400. By 2002, their debt on average had risen to$18,900 — a 66 percent increase.

The number of students taking out loans also has increased from46 percent of graduating seniors in 1992 to 70 percent in 2000,according to the National Center for Education Statistics.

Some students said the value of attending SMU makes up for thedebt they incur.

“Loans are bad news, but I think the benefits are greaterif you go to a prestigious school like this one,” first-yearstudent Isaac Shutt said. “I have taken out one loan so far,but I’m sure my degree will give me a larger return than thedebt I owe.”

Low interest rates have contributed to the increasing number ofstudent loans.

The interest rate is 2.82 percent in school and 3.42 percentafter school, effective through June 2004 — an all-timelow.

Some students do not want to file a large debt when theygraduate.

“My parents are all about loans and I’m not,”resident assistant Vivien Chao said. “I have only taken outone loan but since my room and board are covered, I rather pay theloan now and have no debt in the future.”

Though getting a loan is much easier than before, theconsequences of accumulated debt are more complex.

Unpaid student loans can lead to bad credit, extra fees andinterest payments, seizure of tax refunds and loss of eligibilityfor other federal loans.

Why do more students find themselves sinking into debt?

Educators cite two primary reasons.

The Federal Unsubsidized Stafford Loan Program, created in 1992,allowed all students, regardless of financial need, to take out aloan. The Subsidized Loan program gives loans only to students withfinancial need and the government pays interest.

With unsubsidized loans, any student is eligible and must payinterest throughout the school year.

Average annual tuition and fees have risen over the past year– 6 percent for private colleges and 14 percent for publiccolleges, according to recently released reports from the CollegeBoard.

Most students and their families can expect to pay, on average,from $231 to $1,114 more in tuition and fees during 2004 than 2003,depending on the type of college.

There are other reasons behind the debt increase.

“I think the two main factors causing an increase instudent loan debt are the changing conditions of the economy andthe low interest rates,” said Marc Peterson, the interimdirector of financial aid at SMU. “After the economy took ahit in 2001, family income and undermined jobs caused many to takeout loans because of reduced resources,” Peterson said.

In order to pay back these loans, Peterson mentioned a risingtrend in debt consolidation.

Consolidation — taking out a new loan to pay off old ones— can be a viable option for anyone looking to reduce largestudent loan bills. Those with at least $7,500 in federal loans areeligible.

Many students see a high-paying job after graduation as thesolution.

“I know that I must find an occupation that provides asubstantial annual salary if I want to be able to make monthlypayments,” Hood said.

Efforts are under way to increase federal loan amounts.

Supporters see a need for higher limits so students can get themoney they need at favorable rates.

Critics say higher loan amounts would add to already high debtlevels.

For information about financial aid and loan inquiries, contactthe Blanton Student Services Building at (214) 768-3417 or e-mailat [email protected].