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Faced with declining levels of state funding and higher operating costs, universities across the country are increasing tuition to maintain sustainable operations. But another trend follows nationwide at colleges such as the University of Wisconsin-Madison, where some students rely on higher-interest private loans to fund their way through college because federal loans have not kept up with tuition hikes.

Although tuition costs at UW-Madison are the sixth lowest among the 11 public Big Ten universities, 51 percent of Badgers who graduated in May 2012 had outstanding debt, which averaged at approximately $25,800 per debted student, according to the University of Wisconsin 2012-’13 Data Digest.

UW-Madison sophomore Kayla Van Cleave, who was elected to the Associated Students of Madison Student Council for 2013-’14, said she relies on public loans over the short term to pay for school.

“Whether that means [students have to] eat two meals a day instead of three—everyone’s watching their funds,” Van Cleave said.

According to inflation-adjusted data from the Data Digest, undergraduate students attending UW-Madison during the 2011-’12 school year paid tuition rates over 61 percent higher than rates during 2003-’04.

Between the 2008-’09 and 2011-’12 academic years in particular, tuition at UW-Madison increased approximately 22 percent, but over that same time the amount of federal funding supporting UW-Madison’s loan programs increased by only half that amount, according to the most recent information from the Data Digest.

This means many students need to seek outside financing in order to pay for school, but private lenders tend to have higher interest rates than federal loans, which generally have low or no interest rates. For instance, the government-funded Perkins Loan has a fixed rate of 5 percent, whereas UW Credit Union, a private lender, has a fixed rate of 7.49 percent for student loans.

Susan Fischer, director for the Office of Student Financial Services at UW-Madison, said the total cost of tuition, housing, books and food can be far greater than what a student can borrow from federal loan programs, particularly for out-of-state students.

According to the OSFS, students seeking federal loans from UW-Madison over the 2012-’13 academic year could borrow a maximum of $58,500 for their entire undergraduate career from the school through the Federal Perkins Loan as well as Federal Direct Subsidized and Unsubsidized Stafford Loan programs. But this only covers 61.4 percent of a four-year education for an in-state undergraduate at this year’s tuition rate and 36.5 percent for an out-of-state undergraduate.

“Students can only borrow so much [from the federal loan programs] per year,” Fischer said. “Sometimes it’s just too big of a hole, too big of a gap.”

Approximately 6 percent of undergraduates who received federal loans during the 2011-’12 academic year took out additional loans from private financial institutions, according to Fischer. Over the same period, 13 percent of students relied solely on private loans and avoided the federal program altogether.

Sherry Nelson, educational lending product manager for UW Credit Union, said many credit unions across the country started offering student loans to members because a demand exists for private student loans, particularly as federal loan programs cannot cover all expenses alone.

“[The cost associated with attending college] goes up every year, and the financial aid available through the government program does not increase along with it,” Nelson said. “The need to finance that gap just continues to grow.”

Despite the increased need to borrow, the default rates, which indicate the amount of students who fail to repay their student loans, are very low for UW-Madison graduates, according to Fischer.

Fischer said UW-Madison student default rates for the Federal Stafford Loans over the 2009-’10 school year were 1.2 percent, compared to a national rate of 9.1 percent. Default rates for the Federal Perkins Loan were 1.2 percent, compared to a national rate of 8.3 percent.

“[Default rates are] such a relative thing, but we’re doing pretty darn good,” Fischer said.

Nelson said UW Credit Union also sees low default rates on its student loans for UW-Madison students, partially because it has a more stringent application process that often requires students to have cosigners. Additionally, she said UW-Madison graduates tend to have a higher likelihood of finding employment and are thus more likely to repay their loans.

Despite low default rates for UW-Madison graduates, Van Cleave said students still have to take on rising levels of debt to attend college, which will likely continue if tuition keeps rising, particularly after the proposed two-year tuition freeze state legislators are currently debating would expire.

“I think [rising tuition has] definitely become the norm, but just because it’s the norm doesn’t mean it’s just,” Van Cleave said.

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