Graduation from college often plagued by student debt

Data is from the College Board, a national association of colleges and universities that researches college costs, comparing the amounts of student loans nationwide.

 

By Kelly Reed
Online Forty-Niner
Contributing Writer

Young people in the United States are told from preschool on that they are lucky to live in a country that provides the opportunity to succeed at whatever they choose. No one ever mentions how much that actually costs.

As students graduate from college, with their families beaming widely in the crowd, they feel they are ready to go out into the world and start their adult lives. Many of those students, however, are entering the arena without a clean slate. Student debt looms over their shoulders, and in some cases, these crippling bills, due usually six months after graduation, will force students to re-evaluate their life choices.

About 64 percent of students graduate with an array of debt, with the national average load reaching $18,900 in 2002, according to the most recent survey by lender Nellie Mae.

In 1970, 80 percent of government aid to students was provided in grants, and 20 percent in loans. By 1995, it was the reverse: 20 percent in grants and 80 percent in loans. In 1993-94, there were nearly 3.8 million student borrowers. In 2002-03, there were almost 6.1 million, according to the College Board, a national association of colleges and universities that researches college costs.

High college expenses and enticingly low interest rates are putting some new grads into a different debt cycle. Loan repayments follow them into what should be a more financially rewarding phase of life, hampering their ability to get mortgages, buy cars and start savings.

Tuition increases are not the only reason behind the rise in student debt.      

"Culturally we've changed our minds about what we expect to have when we're in college," says Douglas Breithaupt, president of the College Planning Network. "Twenty years ago, students were more inclined to share a home, not have a car, didn't have a cell phone, whereas now, students coming out of high school have an expectation."

Student loans, ideally, should pay for themselves. The loans qualify grads for better jobs, with better paychecks with which to pay back the loans. "Now, in these times of unprecedented student debt, it means the most educated individuals in our society, who would go out and do the best financially, are also the ones entering their careers with the heaviest debt we've ever asked our graduates to carry," Breithaupt said.

Many students have attempted to keep down their loan levels by taking part-time jobs. Nationwide, 74 percent of all full-time undergraduates were working in 1999-2000, averaging 25.5 hours per week on the job, according to the U.S. Census Bureau. That is up from 1992-93, when about 65 percent of full-time undergraduates were working an average of 23.5 hours, according to the agency. Studies have shown, however, that working more than 20 hours per week can result in lower grades and higher dropout rates.

Noel DeGrasse, a CSULB senior graduating this month with a bachelor's degree in health science, says, "Because I had to work continuously while I was in school, it took me seven years to finish, and I had to get loans for those years of schooling that I couldn't afford. But I also couldn't afford not to work. It's a lose-lose situation."

Looming debt has forced some college students to re-evaluate whether they can afford to enter rewarding, but low paying, professions such as teaching and social work.

Almost one in five college and professional school graduates says he has changed career plans because of student debt, according to the 2002 National Student Loan Survey from government-backed lender Nellie Mae. These graduates may tend to back away from low-paying jobs in nonprofits, the arts, or government.

Paul Knight, a CSULB student already facing a $22,000 debt after six years of study, says, "My future loan payments definitely figured in deciding to change my major from biology to engineering. I can make more money in that field in a shorter amount of time and I can pay off my loans faster."

The survey also found that the need to pay off student loans forces many college graduates to delay other dreams, such as buying a home or having children. And parents beware, 13 percent of respondents said that student loan debt forced them to delay moving out of their parents' house.

But while loans can be a burden, a degree still pays off. A college graduate earns on average $1 million more over his or her career than a person with a high school diploma.

Overall, higher education remains an attractive investment. According to Postsecondary Education Opportunity, the median income for a college graduate in 2003 was $48,896, compared to $29,800 for a high-school graduate.