Editorial: Diplomas with debt

Tuesday, May 29, 2007 | 7:01 a.m.

College graduates are starting their lives with what, unfortunately, has become an American tradition - debt.

A story by USA Today last week says that debt accumulation - mostly student debt - is the reason people younger than 40 are failing to attain the kind of financial security that their parents had.

According to the most recent figures available from the College Board - an association with members representing more than 5,200 of the nation's colleges, universities and schools that is responsible for such programs as the Scholastic Aptitude Test - the average college graduate carries about $20,000 in debt. But for a great number, especially those who earn advanced degrees, the burden is three or four times higher.

The situation is exacerbated by steady increases in tuition when the amount of federal grants - money that does not have to be repaid - has dwindled. Most federal aid now comes in the form of loans, with interest rates ranging from 5 percent to 8.5 percent.

What's more, Congress and attorneys general in three states are investigating allegations that universities have been receiving gifts or payments from private lenders seeking to market loans to students.

A certain amount of debt can be a good investment in one's future. But it hardly seems sensible for society to have thousands of young people who are tens of thousands of dollars in debt. Such financial burdens make it difficult to adequately save for their futures when the stability of such programs as Social Security is uncertain.

University foundations should more seriously consider dipping into their multimillion-dollar endowments to make more scholarships available, and more states should consider efforts such as Nevada's Millennium Scholarship Program. Investing in these young people is an investment for all of us.