Student debt lower in Springs than nationally

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Student loan borrowers in Colorado Springs owe about $6,400 less than the national average of $28,400, according to the new Congress & Student Debt report.

LendEDU, an independent student loan refinancing marketplace, analyzed student debt data from state and congressional districts for the report.

Across Colorado, the average student loan debt per borrower is $26,095. It is even lower in Colorado Springs, Fountain, Falcon, Woodland Park and Monument, with the average student loan debt in Congressional District 5 standing at $21,979. Just 3.56 percent of borrowers in the district default on student loans — about one-third the national average.

That’s good news for the local economy — lower student loan debt usually means more cash to spend elsewhere — but college financial aid officers and financial advisers say caution and rigorous planning are needed to keep that loan debt down.

Carol Breglio, private wealth advisor at Breglio, Long & Associates, said many graduates “absolutely are delaying a lot of decisions” because of student loan debt.

“They are really delaying marriage until they can get their financial house in order,” Breglio said. “They’re delaying starting to work toward their ultimate financial security, which is putting money in retirement plans, and they’re delaying the commitment of a roof over their head.

“That’s why a lot of Millennials still live with their families or with a large group of their cohorts.”

According to the Congress & Student Debt report, about 75 percent of U.S. student loan borrowers have delayed buying a home because of their debt; more than 40 percent have delayed starting a family; more than 60 percent have delayed buying a car; more than 70 percent have delayed saving for retirement; and almost 30 percent have delayed getting married.

Outstanding student loan debt doubled between 2009 and 2017, according to the Federal Reserve Bank of New York. Data from the Federal Reserve Board in Washington shows about 44 million Americans carry an outstanding total student debt of about $1.41 trillion.

Breglio works with students and families to plan how — and how much — they are prepared to pay, well before the “emotional stages” of college selection.

Some students fail to grasp the critical difference between available money and the amount they should borrow, she said, because “they don’t understand how big the loans are and how hard it’s going to be to pay back.”

Jevita Rogers, senior executive director at the UCCS Office of Financial Aid, Student Employment and Scholarships, said students in UCCS’ graduating class of 2016 had an average indebtedness of around $16,800. She said the office’s mission was to help students “become educated consumers… not just borrowing whatever’s offered to them.”

Rogers said horror stories about student loan debts in the hundreds of thousands came with extenuating circumstances, and “it’s the extreme stories that make the headlines.”

Rogers pointed to graduates of a Tier 1 law school as examples of such outliers.

“Between their undergraduate and law school careers, on average it was about $120,000 — but that was a mortgage for a condo,” she said, referring to her time working for an institution in another state.

“Unfortunately … they were starting out at $30,000 a year, so a $1,000 loan payment was out of reach.”

In other cases, “the deeper details [showed] a lot of times the loan debt had gone so high because the student had not paid on their loans,” she said. “They had accrued interest and … then 33 percent collection cost, so it gave a bad view of what was really happening.”

Still, those stories had helped start conversations about the dangers of over-borrowing.

“Now people are more conservative about what kind of debt they’re getting into,” Rogers said. “It has been a change in culture.”

Erica Shafer, associate director of financial aid at Colorado College, agreed there is increasing “awareness and prudence” about student loans. Students in Colorado College’s class of 2016 who needed loans borrowed an average of $20,742 to complete their undergraduate degree, she said.

Shafer said improved education about financing would help students use loans more effectively.

“There was an article that just came out about how the forgiveness and repayment options available to student borrowers [via the Department of Education] are so convoluted that no layperson … can reasonably follow them,” she said in an email.

“Current forgiveness and repayment programs need to be simplified, both in terms of how one qualifies for them and how one applies for them.”

Still, Shafer said, simplification only goes so far.

“As a student who attended college utilizing a lot of financial aid, and … who has worked in a financial aid office since 2005 … my concern isn’t that no resources currently exist to help students mitigate their student loan burden, ease repayments or learn more about managing loan debt, but that lots of those sorts of resources exist and students don’t go looking for them until they are preparing to graduate from college,” she said.

“The conversation about where to find those resources should not start at the end of one’s college career, or even during it, but before.”

Editor’s note: This is the first of two articles on the impact of student loan debt. Next week’s article will look at colleges’ increasing role in preventing student loan debt disasters, and how this investment benefits Colorado Springs.

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