Student loans go on long after graduation

Student loan debt is gradually presenting itself as the next big financial hurdle nationwide.

The average debt students faced from loans exceeded $25,000 in 2010, the highest yet, according to the Project of Student Debt in Oakland.

In a report by the National Association of Consumer Bankruptcy Attorneys, a quarter of the attorneys said that the number of student loan clients has increased 50 - 100 percent.

Students in financial need depend on either federal or private loans to pay for their degree. Federal loans include subsidized and unsubsidized loans. Many students will opt for the unsubsidized federal loan for its lower rate. However, obstacles are making the process harder on students.

"You need to have very good credit to get a good rate," said Mirna Valenzuela, a financial aid counselor at DePaul University. "Students have to shop around."

While federal loans are the preferred method, undergraduate students cannot rely on them for all their financial aid.

"Federal government only allows you to borrow so much as an undergraduate," said Valenzuela, who explained that undergraduates are limited to $5,000-$12,000 in federal loans.

Many undergraduate students must apply for private loans, which have a greater interest rate, and often require cosigners. Parents are commonly the cosigners to private loans, but parents prefer the loans be on the student's account, so that the debt is not shared, according to Valenzuela.

Stef Gray, 23, a recent college graduate on the East Coast, began a petition against private loan distributor, Sally Mae, after being required to pay a $300 fee for needing to delay her payments because she was unemployed, a process called forbearance. On top of that, she pays a 9.75 percent interest rate because she did not have someone to cosign her loan.

"As an unemployed person desperately looking for work, I need every extra dollar I have to pay for rent, electricity and groceries," Gray said on her petition website. "But Sallie Mae is preying on people like me and cashing in on the fact that we need more time to find work before we can repay our student loans."

Gray said that none of the fees went to paying her loan down and her debt continues to grow by approximately $1,200.

Students and staff at DePaul are looking for answers to the situation, but students argue that they need the loans to earn a higher degree to get them the job that they will need to pay off their loans.

"I assume that I will deal with them for the next 20-30 years. However, I think it's worth it because I had no other options," said Kelson Fagan, a graduate student at DePaul. "I moved to a new city for school, had no job and even now I can only work part time so I can focus on school."

DePaul University offers some guidance to students who are completing their degrees and nearing the repayment stage of their loans.

"Every time a student completes their degree, we send out information on exit counseling," said Karen LeVeque, director of Financial and Student Services at DePaul.

LeVeque urges students to look at DePaul's Financial Fitness Program, a free service to students that provides money management workshops, one-on-one financial counseling and online resources for making financial choices after college.

On a national scale, President Obama proposed a $10 billion increase in campus-based funds that are aimed to support more financial aid for students. He is also proposing greater aid to colleges that can keep tuition down.