Affordable Higher Education News

Student debt increased 3 times faster than the cost of living in the Minneapolis-St. Paul area from 1993 and 2004, according to a new report released today by U.S. PIRG Education Fund. Today’s new graduates carry record levels of student loans due to rising college costs, stagnating grant aid, and shifts in state spending. On July 1, interest rates on federal student loans rose to their highest level in six years, increasing almost 2 percentage points to 7.14% on current loans and 6.8% on new loans.

In “Student Debt and Consumer Spending in the Minneapolis-St. Paul Area,” the USPIRG Education Fund analyzed the Bureau of Labor Statistics’ Consumer Price Index (CPI) survey of the cost of core consumer goods like food, housing, transportation, health and apparel costs in the region. They found that between 1993 and 2004:

• Average student debt for students across the country increased by 107%
• Cost of living in the Minneapolis-St. Paul area increased by 35%
• Health costs in the Minneapolis-St. Paul area, including insurance, drugs, and medical care, increased by 52%.

“As interest rates climb, health care, rent and other basic expenses will have to compete with even higher student loan payments.” explained Ryan Simatic a student at the University of Minnesota, Twin Cities. “Add rising student debt to today’s cost of living and stagnating incomes, and you can see why more than one in four young adults are uninsured.”

In their report the U.S. PIRG Education Fund recommended that Minnesota, the federal government and colleges focus on solving the problem of student debt. Among the report’s recommendations are increasing need-based grant aid and reforms to make student loan repayment more manageable for borrowers.

“With our future earning capacity devoted to paying off the extra debt created by the rising tuition and interest rates, students today are faced with some tough decisions.” said Scott Formo, President of the Minnesota State College Student Association.

Nicki Bottko, a student at St. Paul College added, “As this report shows student debt and health care costs have risen radically. I am one of the many students who have had to make a choice between the two.”

The BLS’ Consumer Price Index survey for the Minneapolis-St. Paul area includes the following counties: Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and Wright counties in Minnesota and Pierce and St. Croix counties in Wisconsin.