Greg McGovern bucked the odds in his first two years of college.
He worked enough, and saved enough, to put himself through
school without borrowing. But when he enrolled full-time,
McGovern followed a familiar path.
He took out a federal student loan. In his case, the $9,000
loan is unsubsidized. Interest will accumulate at 8.25 percent
over the remaining year of his enrollment at the University of
North Florida. And he likely will have to take out another loan
next year before graduating with a sociology degree.
"It bothered me, but it's a necessity," McGovern said.
His assessment is backed by a variety of federal statistics.
The most recent data shows more American students are turning to
federal loans to finance their educations, and borrowing
substantially more than their predecessors.
And while recent data shows the overall rate of defaults on
student loans is dropping, students who attended traditional
twoand four-year colleges are defaulting in greater numbers.
The increase in indebtedness, outlined in a report released
last month by the American Council on Education, is outpacing
In 1995-96, the most recent year available, 52 percent of
students who received bachelor's degrees from a four-year public
institution obtained a federal loan. On average, they borrowed
Just three years before, only 35 percent of such students
obtained loans. And they graduated with an average debt of
The trend may be attributable to congressional actions to
broaden eligibility for subsidized federal loans, increase the
limits and create a new unsubsidized loan program for all
students, regardless of income. In an unsubsidized loan,
interest accumulates as soon as the loan is authorized.
"Loan programs have changed themselves, making it much easier
for students to borrow," said David Merkowitz, director of
public affairs for the American Council on Education.
At the same time, grant opportunities have remained about the
same. The maximum Pell Grant, which was flat for years, will
increase next year to $3,000, he said.
For students like McGovern, borrowing is the only way to
finance a college education. Others, like fellow UNF student
Michelle Vandewal, find other options. Although she receives
reimbursement for military service, she borrowed from her
parents to cover the up-front tuition and fees.
Many people she knows, however, are several thousand dollars in
debt already. Subsidized federal loans give graduates six months
to find a job before the payments must begin, and the interest
is covered while the students remain in school. Many students do
not realize how much they've borrowed until the first payment
"Before you really realize what you've done, you're into it,"
The national default rate for federal student loans has dropped
significantly from its high of 22.4 percent in 1990 to 10.4
percent in 1995, the most recent year available. But the rate is
somewhat misleading. The default rate varies tremendously among
Students who attended proprietary and other skill-specific
schools, such as beauty schools, default in far greater numbers
than traditional college students. …