College students are taking out more loans to cover expenses despite many lenders leaving the industry due to the national tightening of credit markets.

“More and more students are utilizing loans to pay for more than basic college tuition,” said Bobbie Felder, vice president for student services at Orangeburg-Calhoun Technical College.

The cost of tuition for many OCtech students is completely covered by some form of financial aid. But Felder says students are now using loans to compensate for increasing living expenses such as rent and gas.

In 2001, OCtech students took out $291,000 in loans. That amount rose to $3.1 million in 2007, Felder said.

A few miles away at South Carolina State University, a similar trend is also occurring.

Sandra Davis, the director of financial aid at S.C. State, says students are taking out more loans because there’s not enough grant money to keep pace with rising college costs.

Davis says many parents are not able to help out with their children’s college expenses because of the economy.

“As parents aren’t able to cover the costs, more students are turning to student loans,” she said.

She said the cost of textbooks is often overlooked when calculating the overall price of attending college.

Like many colleges and universities, both institutions increased their tuition costs for the 2008 year.

However, the number of available student loan lenders is steadily declining in the face of the slumping economy.

The National Association of Student Financial Aid Administrators reports 111 lenders have suspended giving out federally guaranteed loans.

If a student’s lender quits the business, they are able to select another one to cover their costs.

Congress acted earlier this year to ensure student loans would remain available to students by providing more liquidity for lenders and increasing the amount a student can borrow by $2,000 per year.

“Students are borrowing more money than they have in the past,” said Dr. Ed Miller, director of student financial aid and scholarships at the University of South Carolina.

Miller said last year an estimated 12,000 students took out more than $160 million in loans at USC’s Columbia campus alone.

Meanwhile, Voorhees College isn’t experiencing a rise in student loans requests because of its private status and lower enrollment.

With an enrollment of less than 600, Voorhees is able to give larger grants to students, reducing the need for loans, according to Assistant Vice President for Financial Aid Augusta Kitchen.

“This year, it’s been a little bit less loan volume than in past years,” he said.

But statewide, “Right now, we’re seeing a big increase in our loan volume,” said Chuck Sanders, president and CEO of the South Carolina Student Loan Corporation.

Sanders said it’s hard to say if economic factors are contributing to more borrowing. He believes the main catalyst for the spike in loan volume is that more money is now available for students. He noted student loans don’t require a credit check or cosigner.

“It’s easy money to get,” he said.

Sanders expects that more than $600 million in student loans will be taken out this academic year across South Carolina.

Felder says parents often won’t realize that their children signed up for a loan because it is presented as part of a financial aid package.

“Parents should read financial aid letters carefully,” she said. Felder said OCtech does not package loans in its financial aid presentations to students.

Davis said students and parents should be wary of private loans because their interest rates are not regulated like federally backed loans.

Private loans are also becoming harder to get, with 34 private lenders quitting the student loan business, according to the NASFAA.

Davis said financial aid administrators across the country are concerned students might not be able to pay their student loans back if the financial crisis escalates.

“Only time will tell about default rates with the state of the economy ... that might be the thing that goes unpaid,” she said of student loans.

T&D Staff Writer Lee Tant can be reached by e-mail at ltant@times anddemocrat.com or by phone at 803-534-1060. Discuss this and other stories online at TheTandD.com.

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