Deeper in debt by degrees

Sometimes, it’s the “principal” of the thing. Particularly when “the thing” is a loan.

As lots of homeowners learned, borrowing too much money can lead to trouble even if interest rates are relatively low. If college students are wise, they’ll realize the current debate about the interest rate for their loans is a sideshow compared to rising prices.

President Barack Obama visited college students last week to argue for keeping the interest rate for federal student loans at 3.4 percent. He urged them to tell Congress, “Don’t double my rate” to 6.8 percent, as current law requires.

He was arguing against ... no one. Republicans and Democrats alike propose holding the rate steady. As is often the case, they differ only over how to offset the cost (Republicans would cut spending; Democrats would raise someone’s taxes). Obama’s presumptive GOP opponent, Mitt Romney, also favors holding down the rate.

No doubt, a higher rate would be a blow to students. And the job market, still stagnant almost three years after the recession ended, means they’ll have a hard time finding a job to pay off their loans, whatever the interest rate.

But the student-loan interest rate has fallen each of the past three years, and student debt rose sharply anyway. It now tops $1 trillion, more than Americans collectively owe in credit-card debt.

The root of the problem is the soaring amount of principal students are borrowing because of the rising price of tuition.

Tuition at Georgia’s public colleges has doubled during the past 10 years. Add the mandatory fees that figure more and more prominently into their prices, and the price has nearly tripled at both Georgia Tech and the University of Georgia.

In fact, given the past decade’s growth rate, students can expect a four-year degree to run them more than $47,000 at Tech and some $46,000 at UGA. And that’s just for tuition and fees: Living expenses for four years add thousands more.

Ten years ago, the cost of two semesters at either school was about $3,600, for an expected cost of $14,500 over four years (again, for tuition and fees only). It’s much the same story at Georgia’s other colleges.

Is a degree really worth three times as much now as then?

Now, like most state agencies, colleges have been getting less from the Legislature: an average budget cut of 3 percent a year since 2008. So they’ve jacked up tuition and fees by 10 to 14 percent a year since then, depending on the school.

But that doesn’t explain why in the previous five years, when their take from the state budget was growing 5 percent annually, tuition and fees were still rising 6 to 8 percent a year. General inflation was about a third as fast. (The generosity of the HOPE scholarship almost certainly explains part of the faster growth for college prices.)

Had tuition and fees grown at even a 4 percent clip during the past decade, a loan to cover them at UGA for four years — even at that doubled federal interest rate — would wind up costing a student about $31,000, according to the feds’ online calculator.

At current rates of tuition growth and even assuming the lower interest rate, that same student is looking at $54,000.

That’s an extra $200 a month in loan payments. For 10 years.

If this tale sounds similar to that of health care, you must have aced the SAT. Health care, education, energy: Markets in which the government plays a large role have seen prices grow wildly. That’s a big reason many Americans feel they aren’t getting ahead, college degree or not.