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Recent grads are finding themselves swamped by bills for their education.
Justin Kozloski of Dallas job shadowing reporters at The Times Leader. Many graduates these days are finding that landing the right job is secondary to coping with the high cost of repaying the student loans that got them through college. Tuition has skyrocketed in recent decades, forcing students to rely more heavily on borrowed money to complete their educations. When they graduate they are confronted by large payments on their student loans.
PETE G. WILCOX/THE TIMES LEADER
Lauren Majewski , a sophomore at Misericordia University, Dallas Township, helps freshmen move into the dorm.
Charlotte Bartizek/for the times leader
Denise Williams talks about the struggle she faces to pay off $45,000 in student loan debt she amassed to obtain her bachelor’s degree.
Aimee Dilger/The Times Leader
Denise Williams entered Monmouth University in New Jersey in 2005 with hopes of earning a degree that would land her a job as a television news broadcaster.
At age 21, she didn’t give much thought to the more than $20,000-a-year cost for tuition and room and board. The college had a great communications program, and nearly the entire cost was covered by student loans. She assumed she’d get a good enough job to pay back the loans after she graduated.
Six years later, the 27-year-old Hanover Township woman struggles to meet even her most basic needs as she deals with the reality of paying off the $45,000 in student debt she amassed.
That dream job as a broadcaster never materialized.
She instead works as a full-time customer service representative, earning just over $11 an hour – ironically at Sallie Mae in Hanover Township, the nation’s largest private student loan processor.
Each month, $376 – or more than 30 percent of her net earnings – goes toward her loans. That doesn’t count another $50 a month she pays to her mother, when she can, to help cover a $500 monthly payment she makes on another loan on which Williams defaulted.
“I couldn’t keep up. The payments were too high,” Williams said. “They’d ask me, ‘Why are you behind?’ I have other bills. I have to eat. They don’t understand or care. All they want is their money.”
For Williams it was a painful lesson. And she’s not alone.
She is among a growing number of college graduates who find themselves in financial trouble as they face the stark reality of just how much their education cost.
Average debt: $34K
Two thirds of college students who graduated in 2010-11 with a four-year degree had at least some debt, with the average debt being $34,430, according to an analysis conducted by FinAid.org, an award-winning website that provides extensive information regarding student aid and loans.
That’s more than triple the $9,797 debt carried by the average graduate in 1992.
That debt has been fueled in part by the huge increases in college tuitions, which also have more than tripled since the 1980s, according a report released in May by the Pew Research Group, a national think tank that researches and tracks data on various social issues.
In the 2010-11 school year, the annual in-state tuition at a public four-year college averaged $7,605, compared to $2,119 in 1980-81 – a 259 percent increase, according to the Pew report.
Private four-year colleges had an average tuition of $27,239 in 2010-11, compared to $9,535 in 1980-81, a 186 percent increase. (All figures are adjusted for inflation in 2010 dollars).
Worth the cost?
As the cost and debt associated with college continues to rise, it has fueled a debate: Is a college education worth the cost?
Educational experts agree there’s no doubt that most college graduates will earn more during their lifetime than the typical high school graduate.
In 2008, the median earnings for a full-time worker age 25 and older with a bachelor’s degree was $55,700, compared to $33,800 for a high school graduate, according a 2010 report by College Board Advocacy & Policy Center.
The Pew Group has estimated the average college graduate will earn $1.4 million over his or her lifetime, compared to $770,000 for a high school graduate – a $650,000 difference.
Those figures are averages, however. The reality is that many college graduates find themselves faced with massive debt upon graduation and little income to pay it, said Dr. Richard Vedder, an economics professor at Ohio State University and author of the book, “Going Broke by Degree.”
Vedder said he’s convinced that, for more and more people, college is no longer the right choice. He has come to the conclusion, in part, by witnessing the fate of his own graduates, many of whom are working in fields that do not require a college degree.
“The mantra is ‘go to college, go to college, go to college,’ ” Vedder said. “But I think for a significant subsection of the population, college today in an increasingly problematic investment. It is, for some students, probably an investment they should not make.”
Vedder said he is particularly suspect of the value of college for students who did not perform well in high school.
“If you went to a good high school with good academics and got good grades … the chances of getting a job after graduation that pays more than a job if you did not go to college is good,” Vedder said.
“For every student that meets those standards, there are probably five or 10 who were in the bottom half of their high school class and for whom college was a struggle. For these people, college is a highly suspect investment,” he said.
Isaac Bowers, an attorney with Equal Justice Works, a nonprofit organization that advocates for student loan reform, said he believes that for the majority of students, college is still a good investment.
The problem is many students fail to adequately consider all factors when deciding which college to attend, he said.
“If you go to a good college or university and can graduate with less than $30,000 in debt, you should still be making in the area that a college education pays off,” Bowers said. “A lot of people, unfortunately, are graduating with more than that. They face an increasingly difficult economy and job prospects right now.”
Make smart choices
Bowers and other experts in college funding say students need to carefully consider a variety of factors, including the cost of the school, the amount of financial aid that is being offered and the estimated salary level of the career they expect to enter.
“People need to approach where they go to school and how they’re going to pay for it like a business decision,” said Deanne Loonin, director of the Student Loan Borrower Assistance Project run by the National Consumer Law Center. “It’s really important that you have a sense of what you want to do when you get out of college and a sense of what the salary will be.”
Unfortunately, the business end of college is typically the last thing on students’ minds when they enter school, Bowers said.
“If you are 18 years old, you may be thinking what is the most fun school I can go to and where are my friends going. You’re not thinking of it so much as the business decision it really is,” Bowers said.
That attitude is fueled by the easy access most students have to loans to fund their education.
“It looks like they’re getting free money,” Bowers said. “You sign a few papers and a check is deposited in your bank account. The long-term implication of that debt and how much they have to pay over time is not what an 18-year-old is thinking about when they go to college.”
Justin Kozloski, a 19-year-old Dallas resident who is entering his sophomore year at Franklin & Marshall College in Lancaster, admits he hasn’t given much thought to the cost of his education.
“I visited over 26 college campuses and reviewed more than 50 schools,” he said. “I got on the campus and listened to the tour guide and knew, this was the place I want to go. I didn’t even look at the tuition to be completely honest.”
Tuition and room and board at the school for 2011-12 has been set at $49,840. He was able to attend the school last year as a bio-chemistry major thanks to roughly $44,000 in grants and scholarships, he said. He still had to take out a $10,000 loan to cover the remaining balance and other expenses.
Kozloski estimates he’ll be $50,000 in debt by the time he graduates if he stays at the school. While that’s a concern, it’s not his main concern right now. He’s more focused on deciding on a new major after determining that bio-chemistry wasn’t for him.
“It’s not like an every day on my mind, ‘Oh my God, what am I going to do when I get out?’ ” he said. “I need to figure out what I’m doing in school first and try to get a good enough job where that won’t be an issue.”
Understanding finances
As for Williams, she said she wishes someone had taken her aside to more fully explain what she was getting herself into when she signed on the dotted line six years ago.
Part of her problem, she said, is most of her loans are from private banks, which have higher interest rates and fewer repayment options than federal student loans.
“I wish they had a college course to explain to students this is the difference between this loan and this loan. Students go into this not knowing anything,” she said.
Williams said she thought she was going about her education the right way. She obtained a two-year associate’s degree from Luzerne County Community College, which had much lower tuition, before transferring to Monmouth to obtain her bachelor’s degree in communications.
She knew some day she would have to repay the money she was borrowing to attend the school. But that seemed an abstract concept at the time.
“I really didn’t think much about it. I was just worried about bettering my education,” she said. “I understood they were private loans and I’d have to pay them back, but I thought there would be more options out there for me to make the payments and not have one huge bill all at once.”
Williams acknowledges the irony that she now spends her days giving advice to college graduates who are struggling to pay their own student debt.
“I do feel for these people. They’re just like me, trying to make a living,” she said.
She’s struggling now to make her payments, and finances are about to get worse because she’s due to give birth to her first child next month.
Looking back, she says she regrets her decision to seek a four-year degree.
“I wish I had just stopped at LCCC,” she said. “It’s helpful to have a college degree, but not a bachelor’s degree. Just going to LCCC would have probably left me in a better situation than going on to get a bachelor’s degree.”
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