The number of college students who defaulted on their federal student loans climbed in the fiscal year that ended in September 2008, according to new government data released Monday. And once again, those who attend for-profit colleges and universities were the most likely to default. The grim numbers are no surprise, given that the timeframe roughly aligns with the start of the recession. But they come at a politically charged time, as for-profit colleges fight proposed regulations that would cut off federal aid to some programs if too many students default on loans or don’t earn enough after graduation to repay them. YOUR MONEY: Student loan program changes affect rates, repayment DEBT: Student loan debt exceeds credit card debt in USA Figures from the U.S. Department of Education show 7% of borrowers of federal student loans defaulted within two years of beginning repayment, up from 6.7% the previous year and 5.2% the year before that. Default rates crept up in all sectors of higher education — from 3.7 to 4% for private nonprofit schools, 5.9 to 6% for public nonprofit schools, and 11 to 11.6% for for-profit schools. The data covers borrowers whose first loan repayments came due between Oct. 1, 2007, and Sept. 30, 2008, and who defaulted before Sept. 30. 2009. “Even before the economy went down, student borrowing had doubled in this decade,” said Patrick Callan, president of the National Center for Public Policy and Higher Education in San Jose, Calif. “More students borrowed and they borrowed more money, and they’re now they’re going out in a very tough economy.” The Education Department underscored the for-profit default rates. Education Secretary Arne Duncan , repeating what has become his mantra on the fastest growing segment of higher education, voiced concern about excessive debt and useless degrees while simultaneously highlighting the sector’s positive contributions. Students at for-profit schools represented 26% of federal loan borrowers and 43% of all defaulters in 2008-09, the department says. Citing those figures and the sector’s rapid growth, the department has proposed a complicated aid eligibility formula that would weigh both the debt-to-income ratio of recent graduates and whether all enrolled students repay their loans on time, regardless of whether they finish their studies. The department was flooded with more than 80,000 comments on the proposed regulations in a public feedback period that closed last week. For-profit colleges argue the government is soft-pedaling the potential harm and say the changes would disproportionately hurt minority students. Harris Miller , president and CEO of the Career College Association, which represents for-profit schools, said the major factor driving defaults is not an institution’s tax status but student demographics. For-profit colleges accept higher-risk and lower-income students, and Harvard would have higher default rates if it did the same, he said. Experts caution that the two-year rate does not provide a full picture and many more students default in subsequent years. The Education Department is moving to a three-year rate to determine schools’ eligibility to take part in taxpayer-supported student aid programs. Donald Heller, director of Penn State University ‘s Center for the Study of Higher Education, also cautioned against comparing for-profit college default rates with those at all public and private colleges. He said it’s more accurate to stack them against community colleges, which are closer to for-profits in programming and student makeup. By that measure, for-profits still have default rates that are worse, but it’s closer. The default rate for students at public two- to three-year programs — which covers the vast majority of community colleges — was 10.1% in fiscal year 2008, the new data shows. At for-profit schools, the rate was 12.6% in two- to three-year programs. Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

DETROIT — Many college students are carrying more than a heavy class load this fall. Total student loan debt exceeds total credit card debt in this country, with $850 billion outstanding , according to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com, websites that provide information about student aid and scholarships. Consumers owe about $828 billion in revolving credit, including credit card debt, according to seasonally adjusted numbers in a report on July credit from the Federal Reserve . DEBT: Credit card use keeps falling amid economic uncertainty YOUR MONEY: Student loan program changes affect rates, repayment Finaid.org says it first happened in June. Oddly, some students don’t even know how much they owe — or to whom. “I’m scared to know,” said Carla George, 20, of Detroit, a junior majoring in biology at Wayne State University . She knows that her mother, at one point borrowed about $10,000 through a federal Parent Loan for Undergraduate Students. The PLUS loan lets parents borrow for costs not covered by a financial aid package. George estimates that she has taken out at least $10,000 in other loans. “I think it’s a whole bunch more,” she said. A college diploma and a good job are supposed to be the payoff for years of hard work in school. But for thousands of today’s students, there’s going to be a payback, too — as those loans come due after graduation. Some college students are failing financially long before they get a diploma — or a grown-up paycheck. “Students are far worse off today with student loan debt,” said Alan Collinge, who runs a website called StudentLoanJustice.org, where students discuss their troubles with college loans. With tuition far outpacing inflation for the past 20 years, student borrowing has continued to grow — a whopping 25% last year. Some students who are borrowing never expected to, but their parents have lost jobs or suffered other financial setbacks in the recession. Dramatic drops in home values also have made it far tougher for some parents to cover college costs by simply taking out a home equity loan. For many college grads, that monthly student loan payment is turning into quite a scary number. Kate Baker, 30, pays $600 a month — and has watched less-encumbered friends her age buy houses, travel and generally enjoy more disposable income. Baker doesn’t regret borrowing huge sums to major in government and urban studies at Smith College , a private liberal arts school for women in New England. She’s convinced that her Smith degree has given her an edge and could be the main reason she has been employed for the past 10 years — even if, she jokes, she’s also going to be in poverty until she’s 50. “As you look longer term, it’s scary that my retirement account is basically non-existent,” said Baker, who makes about $50,000 a year as a development director for Wayne State University Press, and another $5,000 as mayor pro tem for Ferndale, Mich. What can you do to hold down your debt so you’re not digging out of it for years after graduation? Get a handle now on “the number” — what you will need each month for loan payments. If, for example, you have $30,000 in student loans, your could be paying about $350 a month for 10 years — if they’re Stafford Loans at a current unsubsidized rate of 6.8% and have 1% in fees. Including interest, you’d be paying off nearly $42,000. To swing this without hitting the lottery, you’re going to need a job that pays far more than the minimum wage. One estimate, according to a calculator at www.Finaid.org, is an annual salary of $42,000, assuming you use 10% of your monthly gross for loan payments. If you start out making $25,000 a year or less, get ready to move back into Mom and Dad’s basement to make those loan payments. Candy Wright, group manager credit counseling for GreenPath in Farmington Hills, Mich., said many young grads are having a hard time lately finding a job that can pay enough to cover their loans. She warns them to be realistic about borrowing. A visit to your college career office can provide a look at estimated salaries in your chosen field and region of the country. Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

This is a preview of a week-long video series starting Monday, May 24 about people who are veterans, single parents, full-time workers — and students, too. Click “see trailers” (above, left) now for the preview, and check back here, students2.usatoday.com , next week for the full video on each featured student. What comes to mind when you hear “college student”? To many Americans , it’s someone who goes to college straight from high school, lives in a dorm, and gets a degree four years later. But things have changed. Three-fourths of today’s students no longer fit that traditional model. According to the National Center for Educational Statistics, about half of today’s students are financially independent; 49% are enrolled part-time; 38% work full time; 27% have dependents of their own. Almost half — 12 million — attend two-year community colleges rather than four-year schools. And most students who start college don’t finish. Only 56% of students at four-year colleges complete a degree within six years, and just 20% of first-time students at public community colleges get a degree or certificate within three years. In their own words A video project dubbed “Take America to College” aims to tell the story of today’s non-traditional college students in their own words and images. The project organizers in January put out a casting call and more than 200 nontraditional college students responded by sending in their stories; 78 uploaded audition videos. Five were chosen to represent the millions of students who struggle to complete a college degree. They are: •Dennis Medina, a police officer and a night student at Bunker Hill Community College in Boston; •Kathryn McCormick, a single mom who waitresses 35 hours a week and is enrolled at Valencia Community College in Orlando •Shane Burrows, who works full-time as a sales assistant while studying at Sierra Community College in Rocklin, Calif.; •Brandon Krapf, an Iraq war veteran studying at American University in Washington, D.C.; •Charnee Ball, a Navy veteran, also at Valencia Community College in Orlando The students each received $500 and won a trip to Washington, D.C., to meet with policymakers. Their stories are featured in a week-long series of videos airing online here at students2.usatoday.com starting May 24. The videos are produced by Purple States TV, a media company that uses both professionally filmed and self-filmed video footage to dramatize issues of public policy, in collaboration with DCTV and the Seattle-based social marketing firm Banyan Branch, with support from the Bill & Melinda Gates Foundation. Kodak donated Zi8 Pocket Video Cameras used by the students to capture and share their stories. Real students, real stories More background on the five team members and their stories: •Dennis Medina — a Boston police officer chosen for the team in an online contest. “I’m not your stereotypical student,” Medina says. “I wear plain clothes with the Boston Police Department Youth Violence Strike Force also known as the gang unit. When I was employed by the corrections office, I started taking college classes, but money got tight, and life got in the way. When I moved to the Boston Police Department, I realized that without a college degree I couldn’t further my career. I can only take one or two classes a semester. Going to college is almost impossible … I have court during the day, then I have my regular shift which is 4 p.m. to midnight. I also have family obligations. I live with my wife, two sons and a daughter and my grandson also lives with us.” •Kathryn McCormick — A single parent and full-time waitress, studying to become a physician assistant. “Each year I take out about $15,000 in student loans to pay my bills. This is an incredibly large amount of money that is going to take me a long time to pay off when I get out of school,” she says. “It’s also not enough to pay my bills. I still have to work. The program I’m trying to get in is extremely competitive and I need every single ounce of my time that I can possibly squeeze out of my day to make sure that my grades are perfect. I’d love to see a change in financial aid as far as the one-size-fits-all cap that they have. It doesn’t matter whether you are a single mom of two kids and struggling and working and trying to do the best that you can. A person who’s a single person still gets the same amount of money as you do. That’s really hard.” •Shane Burrows — Works full time as a sales assistant while accumulating college credits toward an associates degree; he wants to be a music teacher. He is having trouble completing his degree because core courses aren’t available in the evenings, or are being cut because of California’s budget crisis. “When I turned 18, I dropped out of college and worked two jobs because I just couldn’t afford to pay for my education,” he says. “I lost my mom when I was only 7. My dad could only afford to provide a house over our heads, food, clothing, and basics to get by. I needed to work to live and unfortunately I had to put school on the side. After taking five years off school, I decided to go back part time at a junior college. I work full time and quit my second job so I could have time for school. I would love to take more than four classes a semester but I can barely afford to live let alone pay for classes and books. I’m drowning in debt and on the verge of filing for bankruptcy. With rising tuition costs and budget cuts cutting classes, I feel like I’ll never finish.” •Brandon Krapf — an Iraq war veteran, now in the Army reserves and a senior at American University, in Washington, D.C. “When you get the GI Bill it’s supposed to cover tuition but you end up living off of it. They don’t come and tell you, ‘Oh hey, listen, you also have to cover books, rent and your regular bills on top of that.” Luckily with the post 9-11 GI Bill it’s been a lot easier for student vets but there’s still been a lot of troubles with it, especially last semester when they had a huge influx of new applications for the GI Bill. Going to school’s probably put me in debt with student loans a good $100,000 dollars.” •Charnee Ball — Navy veteran who wants to be an aviation mechanic. She is not receiving GI benefits because she was discharged under the Pentagon’s “Don’t Ask Don’t Tell” policy. “I know the people who make those decisions think it’s for the greater good, but believe me, there’s been so many qualified technicians and officers and people who went and did their job and served their country that have been discharged for Don’t Ask Don’t Tell. I did my job. I served my country. And when I need it most, I’m not eligible (for benefits). So it’s really hard for me to make it through, to realize my dream of becoming an aviation mechanic. Right now I’m about $38,000 in debt from student loans. It is a struggle every day to find the money to make ends meet.” Have questions about the students’ college experiences? Leave them in the comments, or save them for a live discussion with Take America to College participants on May 26, 2010 at 1 p.m. ET. You can set an e-mail reminder for the chat in the window below. Chat with the students

Answers About Undergraduate Financial products: Component 2 By THE NEW YORK Situations Ask an Professional – Your Income – Bucks Blog – NYTimes.com Laren Asher, professional on college student financial loans and fiscal assistance, is answering reader queries. Lauren Asher,

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