Students grapple with increased student loans

The rising cost of higher education, coupled with interest rates, has led to an increased burden of debt for many borrowers.

| NADIYAH TIMMONS // The Temple News

For many students, it’s essential to utilize student loans to pursue higher education. The average Pennsylvania resident owes more than $39,000 in student loans, the third highest amount owed nationwide, according to a November 2021 report from The Institute for College Access and Success. 

“I think that everyone should get their loans forgiven because college is way too expensive, it’s ridiculous,” said Eliza Madden, a junior health professions major. “It shouldn’t be unattainable to want to continue your education.”

In July, Temple’s Board of Trustees approved a 4.2 percent tuition increase for in-state students and a 4.4 percent increase for out-of-state tuition. The increase came after Temple projected a decrease of 2,200 undergraduate and 500 graduate students.

After increases in tuition this fall and an overall higher cost of living, some students will be forced to take out more in student loans. For anyone taking out loans this semester, depending on the type, they could pay between 4.99 and 7.54 percent in interest if they fail to repay on time after graduation, according to Federal Student Aid. Due to long lasting loans, borrowers have to sacrifice their income on payments instead of other personal endeavors or financial milestones.

For Avnish Saini, a senior management information systems major, Temple landed last on his list of colleges he wanted to attend because of personal reasons, he said. 

“Tuition obviously affects everyone and it did affect my decision to come to Temple, it was actually my last choice of school, but they offered me a decent scholarship,” Saini said. “So then that heavily influenced my decision to come here, and I think [tuition] should definitely be less.”


Federal student loan borrowers will resume their payments on Oct. 1 for the first time in three years after a COVID-19-related pause froze accounts, CNN reported

While many thought their loans would be forgiven, President Joe Biden’s Student Loan Forgiveness program was blocked by the Supreme Court in June, and qualified students will no longer benefit from loan forgiveness. 

“I know I will be in a lot of student debt, so [Student Loan Forgiveness] was something to kind of look forward to, maybe that I would get some extra help,” said Zoë Tucker, a senior public relations major. “And just seeing that some people don’t view it as a real issue is very disappointing.”

Typically, when tuition goes up, students consequently take out more in student loans to cover the increase. 

Federal student loans are specifically designed to help individuals pay for their education expenses like tuition, fees and living costs. However, the rising cost of higher education and  interest rates has led to the increased burden of debt for many borrowers.

“I know, before college, my plans were to move into the city or something depending on my job, but as of right now, I’m moving back home with my family just to save money and to start paying off my student loans,” Tucker said. 

Student loans also have an impact on the overall health of all levels of the economy. When people have student loan debt, they have less money to spend on buying homes, starting businesses or investing in the stock market. Instead, a significant portion of their income goes towards repaying their loans. 

“Having to pay back student debt interferes with sometimes the ability to just buy a house, so they don’t qualify for it, or certainly constrains the value of the house they can buy,” said Donald Wargo, an economics professor. “And we’re finding that to be a serious problem for millennials right now.”


The reduced spending on other goods and services can slow down economic growth because businesses aren’t selling as much, leading to fewer jobs and money circulating in the economy. Americans currently owe 1.75 trillion in total in student loans, according to the Federal Reserve. 

The amount Americans owe in total will grow with the current increase in student loan interest rates for 2023, thus preventing billions of dollars from flowing into the economy yearly, Wargo said. 

When loans are forgiven, it can boost the economy because people suddenly have extra money to spend and invest, stimulating economic activity. Student loans impact the economy by influencing how much money people can put into it, either constraining it when people owe a lot or boosting it when debts are forgiven.

Before the Supreme Court struck down Biden’s Student Loan Forgiveness Program in July, 1 in 3 borrowers increased their spending assuming their debts would be relieved, others got ahead of their loans by putting down payments during the pause, CNBC reported.

The demand for an increase in available funds to operate Temple was not solely placed on tuition and the students, Temple also cut their operating budget by $60 million, wrote Ken Kaiser, senior vice president and chief operating officer, in an email to The Temple News. 

“Unfortunately; high inflation, flat Commonwealth support for a fifth year and increasing demand for certain services – mental health and counseling – required we have an increase this year,” Kaiser wrote.

Temple’s state-issued funding has remained flat for half a decade at $158.2 million. In May, Temple students lobbied Pennsylvania legislators to increase funding from the commonwealth to $169.4 million, according to the university. 

Pennsylvania isn’t willing to raise their funding and the value of the annual amount decreases due to inflation, Wargo said. 

“If we look at a state like Pennsylvania, it has had a pretty abysmal track record in terms of funding towards higher education,” said Wayne Williams, an accounting professor. “So now Temple has to fundraise and get scholarship dollars in order to fill the gap in the funding that has not come from Harrisburg.”

In July, the Pennsylvania House rejected the proposed increase in commonwealth funding for state-related universities and it is unclear when the third round of voting will occur, The Philadelphia Inquirer reported. 


To combat the student loan crisis, the Biden administration launched the Saving on a Valuable Education program in August, a new income-driven repayment plan, marketed as the most affordable student loan payment plan ever, according to the White House.  

The SAVE plan calculates payments based on a borrower’s income and family size rather than loan balance and forgives remaining balances after a certain number of years. 

Many have changed their spending habits due to the pause in student loan repayment, and the introduction of SAVE will hopefully alleviate some of the burden of student loans for future generations, Williams said. 

“I think for future graduates the new programs that reduce the amount of payment is going to be good for your generation of graduates,” Williams said. 

The plan is estimated to benefit more than 20 million borrowers, particularly low and middle-income individuals and those in public service.

In the meantime, students should utilize to update their information, review their repayment plans and use the loan calculator to determine how much they’ll owe monthly, said Karen Thompson, Temple’s financial wellness coordinator. Students must do their homework to determine which repayment plan to use.

“The SAVE payment plan, students will have to apply for that, but this is a generous program and it will take into consideration their income,” Thompson said. “The payments definitely will be less with this payment plan and the period of repayment is still between 20 and 25 years.”

The increasing student loan debt burden in Pennsylvania and the U.S. remains a significant concern affecting many individuals. Factors, like rising education costs and higher interest rates, have created substantial financial challenges. 

This situation not only impacts personal financial stability but also has potential implications for economic growth. 

“I feel like it’s just upsetting that [Student Loans] really are everyone’s main concern after graduating,” Tucker said. “Instead of like, ‘Oh, I wonder where I’m going to get a job, where I’m going to move and things like that’, and it definitely hinders people in that sense.”

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