UNIVERSITY PARK — As Penn State students graduate with larger debt loads that they’re having a harder time paying off, the university is looking at ways to improve their financial know-how.
According to a report to Faculty Senate Tuesday, Penn State graduates’ default rate on student loans was 3.4 percent last year, compared with the Big Ten rate of 1.7 percent and a national rate of 7 percent.
Anna Griswold, executive director for Student Aid, who gave the report on behalf of the Committee on Student Life, said the latest information shows the numbers increased again. The Penn State rate jumped to 4.5 percent and the national average went up to 8.8 percent.
“Most of our students are managing the repayment of their student loan debts, but some are not managing so well,” Griswold said.
Griswold’s report covered student loans and credit card debt. She described how Penn State students are borrowing more to pay for college. Tuition continues to increase, while grant and scholarship funding remains relatively flat. She said students turn to loans, their parents and part-time jobs to make up the difference.
“As the cost of tuition, room and board increases, so do the number of students who seek assistance to help defray those costs,” Griswold said.
In 2009-10, 67 percent of graduating seniors had loan debt. That year, the median debt for undergraduates at Penn State was $31,133, up from $22,690 in 1999-2000. The amount is also higher than the average debt of students at public universities and Big Ten schools.
College students’ credit card debt is also on the rise. Griswold said data specifically for Penn State students isn’t available, but a Sallie Mae report shows on average students had 4.6 credit cards in 2008 and graduated with average balances of $3,173, up from $1,879.
Griswold said there is probably a case to be made for offering financial literacy programs to students.
“Many students do not know how to make informed financial decisions,” Griswold said. “They may borrow more than they need and engage in risky financial behaviors such as using one credit card to pay off another.”
She said many colleges offer financial literacy programs and some are offered at Penn State, including the online CashCourse program. She said next steps include looking at whether more comprehensive programs should be offered and working with students to determine what would be most helpful.
Michele Haigh, with the College of Communications, said it is a much-needed idea. She’s worked with students who also take another professor’s program on financial decision-making.
“I know the students I’ve taught really wish they could take a class like this,” Haigh said.
Anne Danahy can be reached at 231-4648.
