CONWAY, SC (WMBF) It all begins at the financial aid office, where students can come and apply for loans to help them pay for school. But the problem isn't getting the money, it's paying it back. Almost 10 percent of borrowers from schools across the nation defaulted from federal loans within two years of getting out of school.
Gena Wilkins was one of those students, and she says when she applied for student loans, she didn't read the fine print. Then when Gena took a break from school, she soon defaulted. Wilkins planned to go back to school, but since the default set her back, she wasn't able to get the money she needed to continue. Wilkins says the key is to know exactly what you're committing to.
"I just assumed that I could get to that when I wanted to," said Wilkins. "And so I had to stand up and face that music. It was a huge reality for me to what it truly meant to borrow, and the responsibility of getting that back."
This is starting to be more common, as default rates have increased for public and private institutions. Students are having trouble footing the bill because they can't find a job or the job they have doesn't pay enough to pay off the debt.
Almost 80 percent of students at Coastal Carolina University use a student loan program or a parent loan program. The average amount of money that is being borrowed for in-state students is almost $9,000, and for out of state, $15,000. But once students get out of school, the issue is paying the money back.
The national default rate is on the rise. The default rate for CCU is four percent, which is up from the previous year. There are a lot of consequences with defaulting- from being sued for the amount to hurting your credit score. The school can even be punished if the amount of students not paying back gets too high. Schools can lose eligibility in federal student aid programs.
"We're seeing a lot of people just trying to exist by using financial aid," said James Smith Horry Georgetown Technical College Assistant Director of Financial Aid. "Being able to pay for their day to day living expenses. They're not trying to necessarily increase their lifestyle, but they're using this as an additional crutch to help them through the tough economy."
Smith also says the problem is once students can't pay, they are just giving up, when there are options. Such as deferment or forbearance, which is postponing those bills for up to three years.