State budget cuts making college more expensive

Students at College of Mount St. Vincent in the Bronx at their 2012 graduation ceremony
CBS News

(CBS News) These are tough times for students of all ages. Nationally, one in every five federal student loans taken in 1995 has not been re-paid. The government is aggressively suing to recover the money.

CBS News' John Bentley reports the situation is getting worse, as a new generation graduates in debt and default.

With graduation less than a week away, communications major Andrew Giordano should be cramming for finals at the College of Mount St. Vincent in the Bronx. But his top concern isn't his grades, it's how he's going to re-pay his student loans.

"I've applied for radio jobs. I've applied for retail stores, and I've been getting a lot of 'We're sorry, we'll keep you on our mind,' or nothing at all," Giordano said.

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He's $45,000 in debt, and he's not alone. Student loans are now the largest source of consumer debt, outpacing credit cards and car loans.

Ninety-four percent of undergraduate students now borrow to pay for college. That's up from 45 percent from 1993.

Nearly one in 10 borrowers who started paying back their loans in 2009 defaulted within two years. That's double the rate from just four years earlier, because the price tag for a college degree keeps going up.

"College tuition here was about $18,000 to $20,000. Now, every year tuition has gone up! Now we're hitting, $30,000, $32,000 thousand," Giordano said.

There are several reasons that the cost of college has gone up so dramatically, but the main one is the lack of state funding. Over the past decade, state governments have cut their spending on higher education by almost 25 percent, forcing students to make up the difference.

"It does make me angry. What it's doing is it's stopping people from going out and doing what you love to do," Giordano said.

That may be the hardest lesson to learn for the graduates of 2012.