STUDENT LOANS; COUNSELORS TRY TO CALM WAVES OF DEBT Costs of College Can Sting in Wake of Poor Planning

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Byline: ADAM AASEN

With a few clicks of a computer mouse, students can ruin their financial lives.

Mounting student loan debt -- now about $30,000 for the average U.S. college graduate -- can destroy credit scores and make it impossible to buy a home or even open a bank account.

It's no exaggeration, says Joe Joseph, a student loan debt counselor at Florida Community College at Jacksonville. He said one student told him he defaulted on his loans with serious consequences: His wages were garnisheed, his tax refunds were seized and his wife left him.

It sounds extreme, but it's a story Joseph said he hears all the time.

"Student loans can be great, but if you look at it through rose-colored glasses you can get yourself into trouble," he said. "You can do a lot of damage to your future."

With regular $200-a-month payments, the average college student needs 10 years to pay off the debt from college. In Jacksonville, the average college student receives between $3,000 and $10,000 a year in loans.

And those are just the students who are fortunate enough to receive loans. The recent nationwide credit crunch -- sparked by the mortgage crisis -- has caused many private lenders to say "no" to some students and others to significantly raise their interest rates.

That has more students turning to schools' financial aid offices for help -- not only for how to get loans but how to manage their debt after college, too.

BAD CREDIT, SHRINKING LOANS

The lending crisis hasn't severely affected federally backed student loans or federal grants just yet. About 130 lenders nationwide have opted out of some federally backed loans and at least 170 lenders have left the private loan market. There are still roughly 2,000 lenders offering both loans.

It's more profitable for lenders to give out private loans, but only if students pay the loans back. That's why lenders are tightening credit restrictions and raising interest rates.

The students who are most affected are those who rely on private loans from companies such as Sallie Mae, which includes mostly middle-class families, said Anissa Cameron, director of student financial aid at the University of North Florida.

Many middle-class families don't qualify for federally subsidized loans. The typical scenario, Cameron said, involves a family with four kids making $60,000 a year. Federal assistance would often not be available.

Many of these students turn to private loans, but if they don't have established credit they need ask parents to be co-signers, Cameron said. And with lending rules now much tighter than they were even a year ago, many parents' credit scores aren't even good enough for co-signing.

Nationally, private student loans now make up a quarter of all loans, up from 6 percent a decade ago.

This year, 36 UNF students have already have been denied for federally backed loans. Others haven't received as much money as they planned.

Just this fall, Cameron said she met with a freshman who didn't qualify for federal loans or grants because his father doesn't pay taxes on his income. His father is serving in the military in Iraq, she said.

Still, Cameron said these are common problems and any extra impact from the credit crisis hasn't really been felt yet. The real problems might be down the road, she said.

NOT ON STUDENTS' MINDS

Even when the system works well, students can get themselves into trouble. Many are away from home for the first time. They have no idea how to manage a weekly budget, let alone plan for loan repayment, Joseph said. …