College debt: How does your school rank?

Published: May. 11, 2016 at 4:19 PM EDT|Updated: May. 16, 2016 at 9:43 PM EDT
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CHARLOTTE, NC (WBTV) - Jarron Webber is from a small Carolina town where the mills have closed down. He's 38-years-old, back in school at the Art Institute of Charlotte and banking on a better future.

"It's a second opportunity and a chance of a lifetime," said Webber.

Like a lot of people he's learning opportunity through education comes with a hefty price tag.

"I'd say between $45 and $50,000 (in loans)," said Webber.

Webber's story is not unusual. It's actually becoming the norm. The Department of Education says the average college student now owes $37,000 in just federal loans. The number doesn't include private borrowing, or loans taken out by parents. Total college debt in the country has reached $1.3 trillion. It has surpassed credit card and auto loan borrowing and trails only home mortgages when it comes to consumer debt.

Part of the reason for the skyrocketing debt is the soaring cost of education. According to 'The College Board' in-state tuition and fees at the nation's public 4-year universities is now $9410 per year. Ten years ago it was $5804, a 62% increase.

Bruce Blackmon is the Director of Financial Aid at UNC Charlotte. He's been guiding students through the maze of paying for school for 30 years.

"I don't think we are yet pricing kids out, but I think we in a few short years if tuition rates (continue to) increase and costs increase we could be," said Blackmon.

Blackmon says more families are coming into the higher education system with little, or no cash savings. He says he's seeing an increase in families taking out private loans.

"I think part of it is that parents demand services when then come to a campus," said Blackmon. "They want to see a nice campus. They want students to live in a comfortable nice dorm and those things cost money. Services cost money."

Tonia McDougald is a credit counselor. She works for non-profit Alliance Credit Counseling.  Recently she heard from a person facing $260,000 of college debt. While that number is unusual, she is increasingly hearing from those burdened with college loans. Many of them are parents.

"Yes, and they'll call and say I need someone to help me with my budget because I know have a a $300 student loan payment that I have to make because I co-signed for my child," said McDougald.

There are tools available to help you understand exactly what you are getting yourself into. The Department of Education has an on-line College Scorecard. You can track important numbers for each school you are considering. Those numbers include average annual cost, typical federal loan debt students leave school with, graduation rates and the median salary you will earn 10 years after entering school.

"It is exceptionally important to pick a career that will give you the income that you (will need)," said Blackmon.  "It doesn't make sense to borrow $50,000 if your base rate of pay is going to be $25,000."

Comparing schools here in the Carolinas offers a range of costs and expectations. UNC-Chapel Hill, one of the more difficult schools to get into in the state, has an average in-state annual cost of $13,322. It's graduation rate is 90%. Typical students leave Chapel Hill $15,906 in debt and 10 years after entering school can expect to earn about $50,400. By comparison, UNC-Charlotte costs about a $1000 less, the graduation rate is 54%, students leave $7000 more in debt and earn about $8700 less than their Tar Heel counterparts.

Private schools also offer a wide-range of results.  Duke University's annual cost is $28,058, but borrowing is less than in most places. The typical total debt is just $6500. 94% of students graduate and they earn $76,700.  Queens University in Charlotte costs $23,166 a year. Students leave owing $25,000. 52% graduate and on average earn $38,600.  And at Johnson C. Smith University the average annual cost if $17,384, typical debt is $32,000. 43% graduate and they earn $31,800.

Community college numbers tend to be more closely aligned. They are cheaper than 4-year schools, but graduation rates and earnings are lower. For example,  Central Piedmont costs $11,296 a year, 16% graduate, students leave with $9500 of debt and earn $28,100.

It's also worth comparing private for-profit schools. ITT Tech Charlotte-South for example has an average annual cost of $20,821. 34% graduate and students carry $25,834 of debt and earn on average $38,400.  The Art Institute of Charlotte costs $27,931. 37% graduate, students leave $27,167 in debt and earn $28,200.

"It doesn't hit a student until they graduate and get that first notice from their lenders," said Blackmon. "That's when it becomes real."

The good news for students is there are more re-payment options available than ever before. Payments can be deferred, or spread out over a longer period of time.

"It used to be there was one payment plan and that was it," said Blackmon. "You had ten years to pay it off and you however much (debt) you had you divided it by ten years and that would be your payment."

Some federal loans can be stretched out over 30 years. Others can be paid back based on income and still others could be forgiven if you work full-time in certain public service jobs.

(Click here or here for Federal Loan Program Repayment Information)

McDougald says the key is to do your homework. She says even some private lenders are offering re-payment flexibility.

"If it's a private loan go straight to your (loan) servicer, than Google as much information as  you can," said McDougald. "A lot of times if you don't ask they are not going to tell you (about options)."

As for Jarron Webber, he keeps working towards associate degrees in applied sciences and culinary arts. He's taking it one-step at a time.

"I say its an opportunity at life," said Webber. "So can't be worried about the money."

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