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Moody’s finds gap between college savings and cost

College students have less money saved and are taking out more private student loans as a result, according to a study released Tuesday by Moody’s Investor Service.

David Jacobson, a spokesman for Moody’s, said students across the country are statistically saving less before school.

“There’s a gap between family’s savings and the cost of a four-year degree,” Jacobson said. “Colleges are under a lot of pressure to slow down their tuition increases, while at the same time, they are under a lot of pressure to grow their financial aid, the result of which is a weaker net tuition revenue growth.”

Jacobson said there has been a major decrease in what has been saved for college in families recently, which can lead to colleges having to slow down their tuition inflation.

“Bottom line, universities of all types are under a negative outlook,” Jacobson said. “That means there’s mounting pressure on all universities revenue sources, including tuition. Another is a lot of universities, including [Boston University], receive research grants and that could be subject to sequestration.”

This loss of funding from the government and other forms of income means that many schools may find that they are having trouble earning enough money to keep them afloat, Jacobson said.

However, BU seems to be moving in the other direction, as Moody’s raised BU’s credit rating from A2 to A1 in February.

BU Spokesman Colin Riley said he believes that the recent upgrade in ratings is positive for BU’s future.

“By having an upgrade in your rating, it’s telling investors that their analysis is that BU, for a variety of reasons, is a good and safe investment,” he said.

As for individual student debt, Riley said there have been recent increases in the number of private loans students take out.

“People who borrow are individual students and their families,” Riley said. “The student loan indebtedness last year, as an average, declined and the big increase is in private loans.”

A number of BU students said that both money and paying for school are definitely on their minds.

Jamie Bloom, a Sargent College of Health and Rehabilitation Sciences sophomore, said even with academic scholarships, and with the six-year physical therapy program, she is still worried about paying off her additional loans.

“Everyone wants to be focused on money that they are making when they are older, but you have to be worried about staying afloat with loans,” she said. “I heard the cost just got raised again at BU and it’s just annoying.”

Zach Herbert, a College of Engineering junior, said his loans are not too worrisome because he hopes BU will give him a good start in the occupational world.

“I’m majoring in engineering and I haven’t taken out that many loans, so I’m not that worried that I wouldn’t be able to pay them off because I know that I’d be able to get a good starting salary,” Herbert said. “This school is very expensive, but [tuition] doesn’t rise as fast as other schools, and it’s not just BU that’s expensive.”

Nosakhare Obaseki, a College of Arts and Sciences sophomore, said his family has taken out more student loans this year because BU is more expensive than his last school.

“I’m a transfer student, so compared to where I was before, [Penn State University], it’s a big increase in cost,” Obaseki said. “It hasn’t been easy because it’s a very expensive school, so my parents have taken out $30,000 in loans.”

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