College Students Deal With A Lifetime of Debt

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<p>College</a> students deal with a lifetime of debt</p>

<p>College students deal with a lifetime of debt
Tuesday, February 12, 2008
By Anya Sostek, Pittsburgh Post-Gazette</p>

<p>Elena Gonzalez is saddled with student loans of $52,000 and payments of $273.61 a month for 30 years.In the same soft-spoken manner that she uses to counsel patients and families facing end-of-life decisions, social worker Elana Gonzalez presents a fact of her own future.</p>

<p>"Two-hundred seventy-three dollars and sixty-one cents a month for 30 years," she said, describing her student loan payment. "It is disgusting."</p>

<p>Ms. Gonzalez, 25, knows that she would never have been able to secure the job that she loves as a clinical crisis coordinator at UPMC Shadyside without having her bachelor's and master's degrees.</p>

<p>But for the generation that includes Ms. Gonzalez, those educational achievements have come at a price: Nearly two-thirds of graduates of four-year colleges have student loans.</p>

<p>And with college costs rising faster than inflation, the average cumulative debt for graduating seniors is approaching $20,000, more than double that of 14 years ago.</p>

<p>In ways large and small, those loans are changing the way that this generation lives. Even in the best of circumstances -- in which education does help land the job of the student's choice -- the monthly payments are often accompanied by dread, anxiety and uncertainty.</p>

<p>"It's hard to come to terms with; you're just going to pay it forever," said Ms. Gonzalez, who has about $52,000 in loans from her Chatham University undergraduate degree and University of Pittsburgh master's degree.</p>

<p>She worries about the fact that she and her husband basically have no savings -- he's also a social worker, and also has more than $50,000 in loans. She's been accepted into a Ph.D. program but put her admissions offer on hold, worried how she'll afford at least $18,000 more in loans, and whether the degree will pay off. And she worries how she and her husband eventually will be able to afford children.</p>

<p>She knows that she's one of the lucky ones: She and her husband bought a house in Plum this year, have secure jobs and can at least afford their loan payments. "Lots of my friends have more debt than I do and make $20,000," she said.</p>

<p>More than twice as many recent college graduates reported that their greatest fear was being unable to pay college debt than those who listed terrorism in a 2005 Partnership for Public Service survey.</p>

<p>"There is a psychological effect to carrying loans on your shoulders as you exit college," said Robert Shireman, executive director of the Project on Student Debt, a program of the nonprofit Institute for College Access and Success, based in Berkeley, Calif. "In today's generation, a lot more college students are graduating with debt and they have more debt."</p>

<p>A large debt load can affect the type of job that a student might be interested in. There's particular concern about willingness to go into low-paying teaching or public service careers, said Mr. Shireman, as well as whether students are willing to take the risks to become entrepreneurs.</p>

<p>Students are also much less likely to go on to graduate school when they need to borrow money as an undergraduate, he said.</p>

<p>For some students who fear that certain career choices will limit their ability to pay back their loans, the income-based repayment option in the College Cost Reduction and Access Act of 2007 should restore some piece of mind, he said. The income-based repayment option will limit monthly loan payments to a fixed percentage of a student's income and will forgive loans after 10 years for students working in certain public service jobs.</p>

<p>Students also should be encouraged by the trend started at some elite universities, such as Harvard, Princeton and Yale, which have eliminated loans or drastically decreased tuition for needy students. More than 30 public and private colleges have pledged to reduce or eliminate loans for some students, according to the Project on Student Debt.</p>

<p>Debby Rubin, an associate professor and director of the social work program at Chatham University, sees students who come in more career focused now than they used to.</p>

<p>"The student loans, the payment is what makes people feel pressured," she said. "What I see in general is fewer students feeling like it's OK to just find themselves for a few years after or stumble into what they're going to do."</p>

<p>Olivia Ryan, a 32-year-old law student at the University of Pittsburgh, had the kind of first-year grades that would have put her in contention for a six-figure job at a large law firm.</p>

<p>But Ms. Ryan has decided to pursue public interest law instead -- despite the fact that the salary might be less than half as much as at a large law firm, that she'll have between $50,000 and $60,000 in loans and that she's expecting her first child this spring.</p>

<p>"I'm a little terrified," she said. "I'm definitely worried about my financial forecast. When student loans hit, it should be pretty difficult. I can't say that my mind won't change, that I'll need to take a higher-paying job. I hope I can work everything out, but you never know."</p>

<p>Mr. Shireman's fear is that students like Ms. Ryan will wait until they are done paying their loans before they start saving for other aspects of their lives, such as retirement or buying a home.</p>

<p>"There are the family effects [of student loan debt]," he said. "There's the ability to buy a home, to afford to have children, to save for your own children's education, all of which can suffer because of your student loan situation."</p>

<p>Those effects have been prolonged in recent years because students who consolidated their loans in order to lock in record low interest rates often extended their time of repayment from 10 years up to as long as 30 years.</p>

<p>"Where people are paying much longer, the longer they're waiting to get to that psychological point where they're ready to start saving for other things," he said. "If I say 'I'm going to start setting up my kid's college account when I'm done paying my loans,' well, you might be still paying your loans when your kids are 18."</p>

<p>Danielle Terrell, a supervisor in medical support for outpatient specialty services at the VA Medical Center in Oakland, harbors no illusions of saving for college for her 13-year-old son.</p>

<p>"We'll be paying these back after our son graduates from college," she said. "My goal at this point is to correct our mistakes and be able to help our daughter, who is four."</p>

<p>She and her husband -- both of whom spent years in the military -- are living "penny to penny," she said, trying to pay their $500 per month student loan bill as well as $500 in day care for their younger daughter. She owes $10,000 in student loans; her husband, Brian, owes $36,000.</p>

<p>The family has no cable television, no cell phones, hasn't taken a vacation during their daughter's lifetime and puts 70 miles per day on a car with only liability insurance. They're looking at selling their house and moving from Jeannette to the East Allegheny School District, which is closer to their jobs and has full-day kindergarten.</p>

<p>The worst part of it, said Ms. Terrell, 31, is that the only way they see improving their financial situation is by getting master's degrees, which would only add more loan payments.</p>

<p>"A bachelor's degree doesn't have nearly the impact that it did 10 years ago, but they cost twice as much," she said.</p>

<p>Her husband will start a master's program in human resources and conflict resolution later this month, though he had thought about delaying it until after their daughter starts kindergarten next year.</p>

<p>Ms. Terrell has regrets -- she wishes she hadn't spent a semester at college straight out of high school when she wasn't ready and that she hadn't consolidated her loan at a high interest rate -- but ultimately, she doesn't see a way around taking out student loans.</p>

<p>For people whose parents can't afford to pay for college, the loans -- even high-interest private loans -- are a "necessary evil," said Timothy James, a 28-year-old sales engineer for Aegis Software.</p>

<p>Mr. James borrowed about $70,000 just to pay for his undergraduate degree, most of it in high-interest private loans, and went back for his MBA, in part just so he didn't have to deal with his undergrad payments.</p>

<p>Though he now has $115,000 in loans and pays well over $1,000 per month in loan payments, he's confident that he made the right decisions. He's making six figures and is married with a small townhouse in Cranberry and a 1-year-old son.</p>

<p>"I came from a poor neighborhood, my mother didn't have a lot of money," he said. "I feel very privileged in the fact that I was able to get a college education. A lot of people are not as lucky as I was."</p>

<p>While Jackie Walker is proud to have paid off her $30,000 in loans from her master's degree in special education in six years, she wouldn't have gotten the degree if she could do it over again.</p>

<p>To pay off the loans, she ate a lot of boxed macaroni and cheese, gave up competing in dog shows and had to move to Arizona to find a full-time job.</p>

<p>When her mother became ill and eventually died, she moved back to the Pittsburgh area to be closer to family. She hasn't been able to find a full-time teaching job here, though, and is working as a teaching assistant.</p>

<p>Brian Kahle, a Downtown lawyer who has about $80,000 in total loans, also isn't sure the graduate degree was worth it. He went straight from an undergraduate degree at Grove City College to a law degree from Duquesne, but his salary didn't match his expectations. Mr. Kahle doesn't own a home and has sold his motorcycle and given up skiing and other hobbies to make his $600-per-month loan payment.</p>

<p>"Hindsight being 20/20, I would have taken some time off to make sure I wanted to undertake that time commitment," he said. "Everyone says you'll make more later on, but you can't be sure."</p>

<hr>

<p>Anya Sostek covers education for the Post-Gazette, focusing on private and religious schools, and public schools outside the City of Pittsburgh. Since joining the PG in 2004, she's also written for the local desk, the editorial page and the business section. She is a graduate of Duke University and previously worked for Governing Magazine in Washington, D.C.</p>

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<p>It seems to me that more and more people are waking up to the fact that college can be an overrated investment. There are also not enough good jobs to accomodate all the grads we’re churning out of our 3000+ schools. Of course the schools never tell you this in their glossy brochures, they just want your butts in their seats. I’m not saying you shouldn’t go, but be careful what you major in and how much you pay. If money is no object sure private schools are great. But don’t into hock and come out an Arts & Science major. Lots of articles on this you can google. Also recommend
Marty Nemko’s website <a href=“http://www.martynemko.com%5B/url%5D”>www.martynemko.com</a> A college/career counselor who cuts thru the BS</p>

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<p>There is a disconnect. Especially when people are young, they don’t seem to understand the value of money. Students take out enormous student loans and obtain non-lucrative degrees, and then have this attitude:</p>

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<p>Society is wrongly focused on monthly payment vs. total cost.</p>

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<p>Some observations :</p>

<p>1) College tuition has been increasing faster than the rate of inflation for many years now. Not only do most schools fail to give students enough financial aid to meet their financial need, they charge students for every little thing, from parking to laundry. Of course, the more money the student earns, the less financial aid he is eligible to receive.</p>

<p>Finally, let’s not forget that there is a big difference between subsidized student loans, which do not accrue interest until the student graduates, and unsubsidized loans, which start accruing interest immediately. A student who graduates with $20,000 in subsidized loans will pay back much less than one who graduates with $20,000 in unsubsidized loans. The latter will have to pay back twice the amount that he borrowed.</p>

<p>2) There are many ways to pay for college including serving your country! Today’s young adults feel like they are entitled to a college education just like older adults feel like they are entitled to free drugs and healthcare.</p>

<p>3) See this link :</p>

<p><a href=“WA529 Home | WA GET / WA529”>WA529 Home | WA GET / WA529;

<p>At that link is a plot of tuition price increases for the state of Washington since 1990. Note: those percentage increases are each year and compound quite quickly! It illustrates quite boldly how much college costs have gone up - and that’s just tuition ! </p>

<p>If someone knows how to post a graphic, please do.</p>

<p>4) The hallmark of the loans is that the lenders are irresponsible to the future because (1) the government will bail them out – or (2) like fer example, the PA Student Loan Agency people and affiliated pols got their own money – BIG salary, BIG perks out up front. Google “student loan scandals” – irresponsibility in loaning is prevalent. Wolves guarding the sheep.</p>

<p>5) The Texas Legislature decreed that colleges will not be reimbursed for a class that a student takes for the third time. The student would pay a lot more if they fail to pass or complete the class the first two times. Also, they made rules to “urge” colleges to move their students out in four years. One incentive is $1000 rebate if students graduate with no more than three hours over the required number for their degree.</p>

<p>A few years ago I read in a college alum magazine that many students are working for lifestyle, not education. In these cases, parents covered education but the students wanted more in apartment, car, entertainment, clothing so they work. Work then gets priority so they show up late, tired, stressed, whatever and they drop classes. Hence, the long time it takes some to graduate and the urging of lawmakers to get done and get out. If I remember, students were occupying seats that kept colleges from accepting and offering seats to new students.</p>

<p>6) Perhaps colleges should cut costs by eliminating programs that do little for you after graduation such as queer studies and cyberfeminism for instance.</p>

<p>7) Some Options to consider:
A. State Schools
B. Community College for two years
C. Work at a company that pays tuition
D. Co-op programs
E. ROTC</p>

<p>It is not your God given Constitutional right to go to a private college and party for four years…</p>

<p>Finally, the above anecdote in the article boggles the mind.</p>

<p>First of all, it is inconceivable that someone who got a post-graduate-level job can’t save $275 per month. And that figure is locked in, so if she’s too incompetent to save money over the years, inflation, which normally destroys diligent savers, will actually help her.</p>

<p>Why didn’t she take a year off in between her two degrees, sock away some money (and learn about the miseries of the working world and thus appreciate college more) before moving on to the master’s program? I friend for instance worked for four years before enrolling in her master’s program, the classwork for which she completed during her off-hours. She was pretty busy, but it was a great experience and she got to do some original research. And She paid the $5000 annual tuition easily from her $30,000 job, because she live responsibly.</p>

<p>If I were this woman, I’m looking at life like this: $275 per month is a small price to pay for being able to have a post-college job that’s rewarding and reasonably-well-paying. What kind of work was she doing in high school and when she was an undergraduate? Surely it was something dirty, exhausting, and low-paying. Now her education lets her do something else. Get those entirely-reasonably payments finished and enjoy life.</p>

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<p>Here’s a general rule of thumb you can follow — If you MUST borrow money to go to college, the rule of thumb is never have loans that exceed what you expect to earn your first year after graduation.</p>

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<p>If you’re worried about money, the easy solution is to just go to your state school. A big name may give you a few little quirks and bonuses, but when it comes down to it, a degree is a degree.</p>

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<p>State Universities are an option of course. And there a lots of Private Colleges whose tuitions are competitive with State Universities ( e.g. Grove City College ).</p>

<p>But remember, In a lot of places, the state run universities could be more expensive than their private counterparts because state run universities typically don’t have (or don’t use for scholarships) endowments like private schools. </p>

<p>Even some private schools with huge endowments don’t use them to reduce the cost of tuition, and that’s definitely a tragedy. As of 2006, my state university had a $1.3 billion endowment–up from $941 million in 2003. Over that same period, in-state tuition has gone from $4,756 to $7,837. </p>

<p>Why isn’t that endowment being used to reduce tuition? Of course, I still get requests for money every year…</p>

<p>That is something they never explain.</p>

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<p>Yeah, when I say state schools, I mean IN-STATE state schools. </p>

<p>Publics rarely give good aid to out-of-state students, but in-state, even if you don’t get aid, tuition is usually under $10k a year.</p>