More than four-fifths of bankruptcy attorneys have seen an increase of potential clients with student loans in the last three to four years, according to a report published by the National Association of Consumer Bankruptcy Attorneys.

Colin Penkoff / Daily Titan

This year, Cal State Fullerton is giving around $50 million in subsidized loans, which represents 10,757 borrowers, said Jessica Schutte, associate director of financial aid at Cal State Fullerton.

Unsubsidized loans add up to $41 million for 8,002 students, Schutte said.

Both types of loans correspond to the Federal Stafford Loans, which “enables students to obtain long-term, low interest loans through banks, credit unions and other lending institutions,” according to a Federal Stafford Loans page on CSUF’s website.

The Federal Perkins loans are also available for undergraduates, graduates and credential candidates with a maximum loan of $4,500. The Direct Grad PLUS Loans are for graduate students and Direct PLUS Loans are for parents. These two loans combined currently cover 264 CSUF students. There are also emergency loans and private loans. In comparison, Pell Grants give up to $52 million to 13,200 CSUF students, Schutte said.

Around 30 percent of CSUF students find it necessary to borrow money to afford their educational costs, knowing the consequences and impacts this could have in their lives.

Sara Barajas, 21, a criminal justice and business administration double major, has already taken out $13,500 in loans during her three years at CSUF; $3,500 in 2010, $4,500 in 2011 and $5,500 for 2012. She has the Federal Direct Loan Subsidized, which means she does not have to pay interest while she is enrolled. Barajas will have to start paying back the loans six months after she graduates.

In total, Barajas estimates her debt to be around $20,000 if she decides to apply for additional loans.

“In the long run I think it was a good decision. I’m glad I didn’t get another job because it would have made me have less time to focus on school … I didn’t want to be a burden on my parents when I can receive financial aid and repay it later on in life when I have a better paying job that I managed to get because I went to school,” said Barajas.

Her first year’s tuition was $6,574, plus $6,500 in other expenses. She did not qualify for more grants, and student loans helped her out.

However helpful loans are, they are not to be taken lightly.

“You want to be wise. Make sure you want to invest in your loan – a loan you have to pay it back afterwards. Be a wise borrower from the beginning, only borrow the amount you need, no more,” said Schutte.

Loans at CSUF can go from $100 to $5,500 subsidized and $7,000 unsubsidized.

In California, the average debt load in 2010 was $18,113, with 48 percent of graduating seniors owing money. This year, average student debt reached a record $25,250.

According to the Project on Student Debt, 20,000 people who recently left college defaulted on a federal payment last year. Student loans are one of the few types of debts that are not discharged in bankruptcy.

At CSUF, the amount on loans have also increased to 17 percent. This is not a surprise given the increasing tuition fees and the growing obstacles to obtain a grant or a scholarship. Gov. Jerry Brown proposed to increase the minimum grade point average needed to qualify for the Cal Grant A and B.

While the student debt and the amount of loans increased, the interest rate for some loans will also increase. For the Subsidized Undergraduate loan, the interest rate between July 1, 2011 and June 30, 2012 was 3.4 percent, but it will increase to 6.8 percent after July 2012.

At CSUF, the amount of the debt is difficult to be determined. One way to have an idea about student difficulties with loans is the number of declines decided by the federal government alleging past default on their loans or prior bankruptcy.

“Those numbers are so small, maybe less than a dozen a year,” Schutte said.

For those students who are struggling with their loans, she highlighted the options the Federal government offers – loan forgiveness programs and the Financial Literacy and Education Commission are some. Options concerning the repayment, deferment and forbearance, among others, depend on each person’s situation.

She also invited the students to look at their resources and evaluate what they can do. “Impact the congressmen and senators. Write to legislators.”

On the other hand, the bankruptcy attorney’s report listed a series of policy reforms intended to “help build a better and more equitable system for student loan borrowers who encounter financial difficulties.” The first one is to restore the bankruptcy discharge for student loans.

The second one involves private student loans.

“(They) lack the fixed rates, consumer protections, flexible repayment options of federal student loans and generally are extended base on creditworthiness,” Schutte said.

“Student loan (issues are) a larger problem that goes beyond reaching high education in general,” said Olgalilia Ramirez, director of government relations at California State Student Association.

On behalf of the CSSA, she vigorously defends affordable quality education.

“We ran a campaign on St. Valentine’s Day (urging) legislature to re-invest in the CSU so the college costs go down,” Ramirez said.

Despite the benefits and negative outcomes that can result from loans, the decision to accept loans falls on each student.