Of the 10 colleges Elizabeth Childress applied to, Lynchburg College was low on the list. Its placement had to do with proximity, not academics: Childress, of Goode, was determined to move further away from her hometown and parents.
At decision time, however, LC posed an offer she could not turn down. Because Childress’s mother works at the college, Childress was eligible to receive free tuition.
“I couldn’t justify going to a school similar to LC but would have left me with thousands and thousands of student debt,” Childress said.
Four years later, Childress, now a senior, has saved more than $145,000 in tuition.
She took out about $20,000 in loans for living expenses, putting her in a better position than the majority of her peers. Still, with graduation on the horizon, that debt is no longer an abstraction.
In Lynchburg and beyond, student debt is on the rise, sparking concern among students, parents and financial aid officers.
“The population it’s affecting is the generation that’s ready to move forward,” said Michelle Davis, LC financial aid director. “If they’re struggling and they’re unable to be successful, we need to be in position to fix that.”
Nationwide, student loan debt is approaching $1 trillion and already has outpaced credit card debt, according to the Federal Reserve Bank of New York.
In Virginia, about 58 percent of college students graduated with debt in 2010, owing an average of $23,300, according to a study by the Institute for College Access & Success.
Three Lynchburg schools exceeded the state average — Liberty University, Lynchburg College and Randolph College. Financial aid officers cite reasons ranging from cost of attendance to the weak economy.
In some cases, parents who planned to pay a significant chunk of their child’s tuition were forced to scale back due to lost jobs or wages. Debt also can be compounded by a lack of financial literacy. Students sometimes do not understand the terms of their loans or do not realize how much debt they are taking on until the bills start rolling in, according to local financial aid officers.
When it comes to paying back loans, students from Lynchburg-area colleges fare well.
Of the approximately 3.6 million students who began paying back their loans in fiscal year 2009, 8.8 percent defaulted within two years, according to the most recent statistics from the U.S. Department of Education.
Local default rates are significantly lower. The range runs from Liberty’s default rate of 4.8 percent to less than 1 percent at Sweet Briar College.
At Lynchburg College, students carried an average debt load of $32,000 in 2010 — the highest in the region.
A contributing factor was LC’s recent spike in low-income students, who typically take out bigger loans to cover their bills, said Davis. Between 2008 and 2011, the number of students eligible for Pell grants — a federal program for the neediest families — increased from 19 to 34 percent.
The Board of Trustees discussed the student loan situation at its October meeting, and is devising ways to decrease the debt burden, Davis said.
“I’m not happy about it. This is one everyone’s minds,” Davis said.
“We know we have wonderful programs and there are so many value-added programs here on campus, but how much debt do we want our students to incur?”
Davis said the increase is connected to the higher number of students who are taking out loans.
“Of course, I would love for it to stay at a 1 or 2 percent default rate. But the fact that we’ve had a significant increase in the number of students who have to borrow, to still be well below the national average; I think we’ve done well, but we can do better.”
Lynchburg College plans to expand its financial literacy efforts. Seniors, for example, will be required to receive counseling on repaying their loans earlier in the year, before they become distracted by job searches and graduation festivities.
LC also offers elective classes in personal finance, which tackle debt and loan repayment.
Though affordability remains a priority at Liberty, the average debt for students graduating in 2010 was $27,663, higher than the state average. The estimate includes federal and private loans for undergraduate residential students, said Rob Ritz, LU’s executive director of financial aid. Liberty did not provide a figure for online students.
Liberty’s blend of online and residential programs allows the university to keep tuition on the low end for private schools, LU officials said.
“There’s not anything more important you can do to help a student stay out of debt than to keep your cost of tuition down,” said LU Chancellor Jerry Falwell Jr.
Liberty’s loan default rate was 4.8 percent for students entering repayment in 2009-10, according to data from the U.S. Department of Education. The rate includes residential and online students, with the latter now comprising the bulk of Liberty’s enrollment. Liberty has about 12,560 residential students and 80,000 online.
Liberty officials point out that the university’s default rate falls well below many of their online competitors in the for-profit sector, which have come under scrutiny for their high default rates.
“There was a concern at one time that online students would just take a course here and a course there, and they might be somebody who is chronically unemployed, but that’s not the case,” Falwell said. “These are people who are out there working. They’re taking more education to move up ... So the outcome’s pleasing to us, the fact that they’re paying their loans back.”
All schools that administer federal loan programs are required to provide financial counseling that educations students about their loans. Liberty has expanded on that requirement by creating more than 60 YouTube-style videos about money management.
“We are pushing financial literacy online more than ever before,” said Ritz. “We have links to videos and information on handling their money, handling a checking card, credit card debt. . . That’s all in addition to the government required entrance counseling.”
By next fall, Liberty plans to implement special programming for at-risk students, such as those who have defaulted on past loans. It’s part of a long-term strategy to keep default rates down, Ritz said.
The average debt for a Randolph student was $27,410 in fiscal year 2010, said Debi Woodall-Stevens, assistant director of student financial services at RC.
Woodall-Stevens cited several factors that might have pushed Randolph’s debt above the state average.
Randolph enrolls a significant number of international students who do not qualify for federal aid and tend to take out large private loans, she said. Students who participate in Randolph’s equestrian program or study-abroad programs also may incur additional debt.
Woodall is concerned about the nation’s debt problem because it’s a burden students will have to live with after graduation.
Her advice to students: “Borrow as little as you can get away with and still pay the bills … Look for as many outside financing options as possible, particularly scholarships.”
Randolph College has a strong track record with its default rates, despite a slight uptick in recent years. The 2007 rate of 1.6 percent nearly doubled by 2009, when it reached 3 percent.
Woodall-Stevens said the lackluster job market has contributed to the jump.
“My personal goal is to keep our default rate as low as possible. To that end, I’m working even harder on default prevention by staying in contact with students in various stages of their loan life,” Woodall-Stevens said.
Sweet Briar students graduated with lower-than-average debt — about $22,500 in 2010, according to Bobbi Carpenter, SBC’s director of financial aid.
Its default rate is historically low. For 2009, the rate was 0.9 percent, meaning only a handful of students were in default, according to federal financial aid data.
Though student loans can weigh students down, the alternative could mean forgoing higher education altogether, Carpenter said.
“Most students probably couldn’t afford to go to college without that student loan debt,” she added.
Sweet Briar emphasizes debt education for its current students and provides a safety net for alumnae who are struggling with their loan bills.
“If you lose everything and you don’t have a clue what to do, if you don’t have a job or you’re having problems repaying your loan, we have an 800 number . . . We’ll help them,” Carpenter said.
The hope is that a college education will eventually “pay for itself” through higher earning potential and better job opportunities, Carpenter said.
Taking on debt is a risk that LC senior Arianna Stelling hopes will result in a rewarding career and, eventually, financial stability.
Stelling works two jobs to pay for her living expenses and make a dent in her student loans.
Raised by a single mother, Arianna was sent to Liberty Christian Academy for grade school so she would qualify for free tuition at Liberty. Between waitressing and running a child care business, Stelling’s mother made ends meet.
After high school, Stelling opted for Lynchburg College because she qualified for a scholarship and believed it was a better fit. Her mother supported the decision, despite the increase in debt.
Stelling estimates that she will graduate with upwards of $35,000 in loans. She plans to take on even more debt for graduate school as she pursues her goal of becoming a college professor.
Taking on student loans has taught Stelling how to budget and avoid panicking over financial stress. She does not regret her decision.
“The struggle to pay for college — I think it’s worth it.”