Melissa Ganshert, a senior majoring in Spanish and global studies, isn’t sure exactly how much she owes in student loans. Last year she calculated the amount to be around $13,000.

The average University undergraduate student leaves school $14,500 in debt. If tuition increases at about the current level through the next four years, and student borrowing patterns stay the same, debt will increase by $3,625 for undergrads, according to the president’s two-year operating budget plan.

Approximately 25,000 University students took out loans during fiscal year 2000.

But students didn’t always rely as much on loans to pay tuition.

“When people talked about financial aid 20 years ago, it was scholarships,” said Nancy Sinsabaugh, interim director of student finance. “Now it’s loans.”

This is not unique to the institution. It is part of a nationwide trend in financial aid.

The College Board, an association of U.S. colleges and universities, released a 2000 report focusing on the increased use of loans to assist students paying escalating tuition. According to the report, “Loan aid has increased by 125 percent during the past decade in constant dollars, while grant aid has increased by 55 percent. Loans comprise 59 percent of total aid available to students, compared to 49 percent 10 years ago and 41 percent in 1980-81.”

While loans are becoming the most available financial aid form, students using them are not necessarily aware of the long-term borrowing effects.

Ganshert, who plans to graduate in December, has taken out student loans since she entered the University in 1998. Her financial aid package includes some work study – and a loan from her parents – but she doesn’t remember the other loans she receives.

She puts all her loan information in one big folder and plans to sort out her debt after graduation.

“I don’t really think they’re written in English,” Ganshert said. “It’s like reading hieroglyphics.”

Ganshert is not alone in loan confusion. Tom Schmidt, associate director in the student loan office, organizes exit interviews for students graduating with loan debt. He said many students are surprised to learn the specifics of their debt.

“When (students) get their money, that’s what’s important to them,” Schmidt said. “They need their money to pay tuition, to pay their rent, to go to school. They really don’t, in most cases, think about what is going to happen when it’s all done.”

Some students might not realize the extent of their loan debt, but they do receive information about loans. The University sends borrowers an e-mail with links to informational Web sites. Students also receive a statement from the loan origination center that specifies the amount and interest rates.

“We trust that students taking on the obligation of a loan take all the obligations that go with it, including being informed,” said M.E.G. Schmidtbauer, the loan unit manager at the Office of Scholarships and Financial Aid. Schmidtbauer helps students with loan questions.

She said her department’s six counselors see an average of two to three people per day – less after financial aid is disbursed each semester.

Schmidtbauer said most students seem to have a good foundation on what it means to take out student loans, but the process can be confusing for a first-time borrower.

“Many times students and family don’t know the questions to ask,” Schmidtbauer said.

Loans can be confusing because of the options available. Students seeking loans can choose from the state, the federal government and private lenders. They must wade through information on interest rates, subsidized vs. unsubsidized loans, co-signers and payment plans.

The University is a direct loan school, meaning students receive loan money directly from the federal government. About 70 percent of schools are guaranteed loan schools, where students can receive money from banks and other institutions backed by the federal government.

Federal loan interest rates currently are low – between 5.39 percent and 6.79 percent. Student loan rates from private companies not working through the federal loan plan are often higher.

Approximately 30 percent of schools nationwide are direct-lending institutions. The University ranks fourth among these schools in the volume of loans borrowed, behind Ohio State University, Michigan State University and the University of Florida.

University students also borrow through the Student Educational Loan Fund program coordinated by the Minnesota Higher Education Services Office. SELF loans provide an alternative to federal loans and currently have a 6.25 percent interest rate.

In 1997, the National Center for Education Statistics released a report on the debt status of bachelor’s degree recipients four years after graduation. The report found more than half of students who borrowed money were still paying it back.

As loan debt increases among students, some University officials argue that potential lifetime earnings outweigh the debt load. According to the president’s two-year operating budget plan, the average high school graduate stands to earn $930,000 in a lifetime; a college graduate with a bachelor’s degree will earn about $1.85 million in a lifetime.

While Ganshert’s expected earnings will be higher than a high school graduate’s, she said she worries about paying off her loans after school. She said she didn’t come to college to get a “junky job” to pay off student loans.

Although her debt is increasing, Ganshert said she couldn’t go to college without loans:

“Ideally it would be nice, but (it’s) impossible.”

Liz Kohman welcomes comments at [email protected]