NY Times: In Grim Job Market, Student Loans Are a Costly Burden

[marmar]

In Grim Job Market, Student Loans Are a Costly Burden

By TARA SIEGEL BERNARD
Published: April 17, 2009


They bought into the notion that if they went to college — never mind the debt — their degree would lead to a lucrative job. And repaying their student loans would never be a problem.

Growing Burden of Student Debt But the economic crisis has turned those assumptions on their ear as thousands of recent graduates have been unable to find jobs or are earning too little to cover the payments for loans that are sometimes as high as $50,000.

The result has been rising default rates for student loans. And unlike other debts, student loans cannot easily be renegotiated.

“You often hear the quote that you can’t put a price on ignorance,” said Ezra Kazee, who has $29,000 in student debt and has been unable to find a job since graduating from Winona State University in Minnesota last May. “But with the way higher education is going, ignorance is looking more and more affordable every day.”

About two-thirds of the students graduating from college next month, or an estimated 1.8 million, have taken on student loans to pay ever-rising tuition and room and board. The average cumulative debt among graduating seniors is about $22,500, according to FinAid.org, a Web site that specializes in financial aid. ..........(more)

The complete piece is at: http://www.nytimes.com/2009/04/18/your-money/student-loans/18student.html?_r=1&em

[HughBeaumont]

1. Oh well. The Middle East can't blow itself up, you know.

Rich people need their tax breaks, or else a bunch of old grizzled white guys will dump tea leaves in ponds. Or something. Priorities.

Besides, you give people a subsidized education like most civilized countries do and all you're going to end up with is a really smart and unemployed citizenry. I mean, if only they wouldn't demand that pesky thing called a "living wage". And here, we thought we could tell them to keep using credit cards to mask the fact that the average American individual income hasn't risen in real dollars since 1979 . . . forever.

Debt means control. Debt means obedience.

We're on to them, and that pisses them off.

[geckosfeet]

2. Right around the Raygun era, education and student loans were relatively affordable.

Interest rates in the 2-3% range and plenty of government grants available. A lot of the loan programs were through the schools directly. The government provided the funds and the schools distributed it. The schools knew the students and for the most made decisions based on need and the students academic record. It wasn't 'free' education but I would certainly call it subsidized.

Then roNNy Raygun popularized the notion of milking the students. He stopped government involvement and encouraged banks to take a more active part in 'helping' students get loans. The banks trampled each other to get at this rich new and relatively uninformed source of debt income. Almost overnight they doubled and tripled interest rates on loans.

Most students have no idea what financial life will be like when they get a job after graduation. Besides a place to live, there are all the other expenses. Having a $500-$1000 month student loan payment is crippling to anyone, but much more so to a new graduate who has to worry about finding and keeping that first job to make ends meet.

[Berry Cool]

3. When I look back, I was so damn lucky.

Because I started getting National Direct Student Loans at the end of the Carter era, no one could jack up the 3 percent interest on them once I started. Guaranteed Student Loan interest--through the banks--was 7 percent. Even after Reagan started chopping away at financial aid, I got a bachelor's and master's and ended up only $15,000 in debt. Those were the days.

[depakid]

5. Yep- Reagan and his pack of jackals set out to dumb down America-

At one point, I recall his Secretary of Education stated- I'll never forget this:

"If kids can't afford an college, then maybe less kids should go to college."

One has to say, he and the Republicans were stunningly successful in their efforts.

[DevonRex]

4. My boys are both in that situation. And we're paying some of the loans, too.

We believed it and our kids believed it. Kinda feels like we've been had.

[GoesTo11]

6. So you should make a conscious and careful decision about college

Don't just automatically go and don't just automatically go to your first choice no matter how much it costs. You can go to a community college for 2 years, then a state college or university to finish up and graduate with relatively low debt. Work while you go and live cheaply.

[hedgehog]

7. When I think of pricey schools, Winona State University in Minnesota is

not the first institution that comes to mind!

The other half of the problem is the rise in tuition and accumulation of mysterious fees at even state colleges and universities. It was possible to work summers and part time, live at home and graduate with no debt when I went to college. I think my kids are paying as much in student fees as I paid in tuition at the same state university 30 years ago!

[GoesTo11]

11. Winona's good value still

Graduating $25000 in debt is not great, but it won't dictate the entire path of your life. $50000 or more sure would.

Where I live, in-state tuition & fees for a state college is about $6000, so it would be about possible to still live at home, work summers & part time and graduate with no debt.

[Missy Vixen]

9. Thanks for that piece of advice

If you've been watching the news lately, you would know that there are community colleges around the country that are significantly reducing applicants/enrollment. You'd also know that there are state colleges that are no longer taking applicants, either. There was a demonstration at Washington State University in the past week, for instance, over the fact that they are now discussing disallowing freshman applicants to save money/lower enrollment.

Budget cuts. Get to know it, it's the new thing. Even if you can get into a community college or state school, the days of affordability are over there, too.

In the meantime, the typical job now requires a bachelor's at the least.

It's a race to the bottom.

>Work while you go and live cheaply.<

It's tough to work when you can't find a damn job, isn't it? Also, I'd be curious to know where it is you're insisting anyone can "live cheaply". Judging by your screen name, I'm thinking you graduated college a long time ago; it's a whole new ballgame now.

[GoesTo11]

10. I understand how hard it is - but don't be a sucker

State / community colleges are still a lot cheaper, so use them if you can. If your only choice is some 25,000/year so-so private school it's probably not worth it. You just start out with a lot of debt. I am not trying to blame anyone for the lousy options they have now, but I do think that a lot of people make choices of this large a magnitude without really thinking it through. Colleges are marketing to try to separate you from your money, so you have to do your own analysis and not take their word for it.

Living cheaply is relative, but I still see state students who spend more than I do on cars, clothes, etc. Working - well, at some point in your years of college you ought to be able to work (although not in this economy, as you say). If you just go and borrow and borrow and borrow, you will end up with more debt.

You're very perceptive, by the way. I didn't realize my screen name shows it, but I went to college back when it really was affordable. I know I had it good and wish that it was still a priority for this country to give people that opportunity. Cutting back on education right now is stupid policy.

[hedgehog]

8. Talk about being stuck between Iraq and a hard place: My kids all have

graduated or will graduate with student loans. My sister's kids had no monetary loans to pay since they went ROTC, but both spent time in Iraq and are liable to further call-up.