Students Buried in Debt Ask for Help

Thursday, October 27, 2011

This year the price of college reached a record high. According to figures from an annual College Board report, the average cost of per year of tuition is up more 8.3 percent for public 4 year colleges and up 4.5 percent for private schools. The average college student now finishes school with between $22,000 and $28,000 of debt. In total, Americans currently owe nearly a trillion dollars in student loans — that's more than they owe on credit cards. President Obama addressed the issue of student debt in a speech in Denver on Wednesday, announcing a new program to lower monthly student loan payments.

One student saddled with debt is Chris Galloway. He graduated in Stony Brook University in 2008 with $14,000 in loans and he can't afford to pay them. He asks Ron Lieber, personal finance reporter for The New York Times, for some advice.

Comments [28]

Julie Johnson from Menlo Park

My 24 year old daughter decided she wanted to be a nurse practitioner. She has been accepted to a 3-year accelerated program that will leave her approximately $150,000 in debt. A scary figure, but she can't do this work without the degree. We hope her career choice will offer enough to pay her debt.

Feb. 20 2014 04:02 PM
D from South Carolina

Interested in comments from parents (or students) who saved for college through out their children's youth, so they would be able to put or help put their children through college debt free. Did not realize how blessed I was that my parents did this for me and my two siblings. My husband's family did the same for four children.

Oct. 28 2011 02:21 PM
Jack

Chris,

There is no social contract that there will be a job for you if you follow this formulaic student loan/education scheme. The employment market is a market - college is supposed to prepare you for that market, not lock in a "lifestyle" just because you went to school. Go out and grab life by the short hairs, don't wait for it to come to you.

Oct. 28 2011 12:40 AM
Jack

Chris,

There is no social contract that there will be a job for you if you follow this formulaic student loan/education scheme. The employment market is a market - college is supposed to prepare you for that market, not lock in a "lifestyle" just because you went to school. Go out and grab life by the short hairs, don't wait for it to come to you.

Oct. 28 2011 12:17 AM
Vicki from Oklahoma

I wish I'd been available to guest on your show this morning. My story would have been far less "cringe worthy" than the sense of entitlement projected by Chris. All he owes is $14,000?!!! I wanted to shake him. My loans (approaching $100k)were crippling by comparison. It was a hardship paying them off, but I did.

I was 27 when I went back to college and 36 when I finished. I knew that I had to provide for my girls (single parent), and a bachelors degree alone would not allow me to do so; further education was my only option.

When I graduated from veterinary school, I went immediately into repayment. Forebearance was not an option in my mind, I was just forced to opt for "Plan B" and change from private practice (monthly salary less than my monthly student loan payment) to government practice (could have a life, raise my girls AND make my loan payments). It was difficult, but 19-1/2 years later, I did it. What was frustrating, however, was the inequality of administration of loan repayment programs: they are available, but are not available for everyone. Examples: USDA (loathe to use it for anyone) and military (not for all careers - veterinarians are not included). I would have gladly done "service for repayment" if I had only been able to find such a program. Even the Peace Corps would only issue a forebearance! So, I just kept writing the checks...

Financial Aid counselors did not do anything except hand me documents to sign every semester. Not one of them told me that the monies I was borrowing were individual mini loans; I naively thought that I owed "x dollars" in NDSLs and "x dollars" in GSLs and at the end, everything would be added together. Nope. That's why my monthly payments were more than my check: each school had a repayment schedule based upon the level of indebtedness. I consolidated my GSLs, but opted to keep my NDSLs separate. I was paying 8.5% interest. I could not refinance those loans when interest rates dropped: You are locked into a rate when you take them out, and that's where you stay (heaven help the ones who got stuck with 11%!).

What is the solution? I think making the loan system EQUITABLE is a place to start. The cost of education is skyrocketing. We can not condemn those who opt to go on to professional school any more than we condemn somebody who opts to major in philosophy. We need to educate students, financial aid officers and parents on post-graduation repayment options. BUT there needs to be relief for those people with private loans, as well as those people with NDSLs and GSLs. I don't know that being able to discharge the obligation by bankruptcy is the answer, but perhaps a plan of community service-for-forgiveness is the correct response. Instead of Roosevelt's WPA, we have our own version of the LPA?

Regardless, this dialogue is long overdue.

Oct. 27 2011 05:23 PM
Wes from Miami, FL

I'm 27 years old with $18,000 of student loan debt. I am amazed by Chris Galloway's short-sightedness, sense of entitlement, and utter lack of personal responsibility. Unfortunately, he is likely far from the only person in his generation (which is also my generation) that feels this way. There are always ways to make at least the minimum payments - especially on a relatively small amount like $14,000. If you really can't afford it, you can get a deference or forebearance. The "societal promise" Chris mentions is fictional - a weak excuse I doubt he truly believes himself. If Chris didn't know the significant lasting negative impact of a 'default on principle' plan before, Ron Lieber informed him this morning. If Chris goes ahead with the default, he likely deserves the resulting consequences. I hope he figures it out sooner than later - those decisions can't be reversed.

Oct. 27 2011 01:41 PM
EdwardBurke

Discrepency, discrepency, discrepency!
Today, over at Marginal Revolution, Prof. Tyler Cowen is quoting Mike Mandel (using Census data and data provided by the Progressive Policy Institute, I believe) to show that 25-to-34 male college grads (Bachelor's degrees only) in the period 1999 to 2010 were earning annual salaries of up to $67K, $73K, and $59K. Yes, the trend is downward overall, but anyone pulling in an annual salary of $50K+ in this economy, I propose, is equipped to pay off any lingering student loans sooner rather than later. (Cowen and Mandel do not themselves identify the career postures of the profiled populations or whether these are median figures being reported, et cetera, but still--) Question: just how much whining and poormouthing are we being exposed to? Why are our resourceful and intrepid journalists failing to tell us the whole story? (I speak as someone with a humanities MA who's never had an annual income much above $40K.)

Oct. 27 2011 01:02 PM
Karissa from Boston, MA

I graduated in 2004 with a PhD and $45,000 of debt. In the past 7 years I have cut that figure in half, but I still have a ways to go.

WBUR (http://www.wbur.org/2010/05/25/student-loans-ii.) did a very interesting comparison between how Holy Cross and Simmons College help their students understand what it means to pay for education. Holy Cross actively educates their students on taking on student debt and will counsel academically-worthy students not to come to Holy Cross if their debt burden upon graduation is unmanageable for their intended career path (A social worker or teacher will have a harder time paying back student loans than an engineer, for example.). Simmons, on the other hand, does very little to cousel these teenagers upon entrance regarding what it means to take on the thousands of dollars in student loan debt to pay their high tuition fees.

Also, I have no sympathy for the couple with $300K in combined student loans for professional schooling. They certainly weren't weren't kids when they signed for those loans. Also, there are many medical schools (usually state schools) where the cost of tuition for professional programs is quite mangeabale; albeit these schools are harder to get into. They had to make the choice that their professional degree was worth the debt it is now costing them. This couple's debt issue, however begs the question that if medical doctors didn't graduate owing so much money, perhaps they would be more willing to let go of the fee-for-service paradigm.

As for Chris from Stony Brook, I could only shake my head and cringe. He has some good points, especially regarding the laissez-faire attitude many colleges and universities adopt toward students who are selling their souls taking out student loans, but his sense of entitlement is scary. Also, Chris' irresponsible attitude regarding his debt obligation will only hurt Chris and certainly isn't going to teach anybody else any lessons. And really Chris, put your $14,000 debt into perspective. Is it worth throwing away your credit?

Oct. 27 2011 12:45 PM
Kate from Oklahoma

I graduated with a bachelor's degree in psychology last year with a total amount of student loans equaling about $10,000. I only ever took out loans for tuition, not living expenses, bills, etc. I am already down to about $6500 owed on my student loans. My husband was deployed for the better part of two years and we were able to use some of the money earned on deployment to pay off some of my loans. I am still waiting tables because there are not many jobs for someone with my degree right now. I am happy because my loans are less than a car payment. We only have one credit card that has a $3000 limit. The only debt my husband and I have is our house, my student loans, and our one credit card. There are definitely ways to be smart about student loans, people just don't always utilize them.

Oct. 27 2011 11:49 AM
Kate from Oklahoma

I graduated with a bachelor's degree in psychology last year with a total amount of student loans equaling about $10,000. I only ever took out loans for tuition, not living expenses, bills, etc. I am already down to about $6500 owed on my student loans. My husband was deployed for the better part of two years and we were able to use some of the money earned on deployment to pay off some of my loans. I am still waiting tables because there are not many jobs for someone with my degree right now. I am happy because my loans are less than a car payment. We only have one credit card that has a $3000 limit. The only debt my husband and I have is our house, my student loans, and our one credit card. There are definitely ways to be smart about student loans, people just don't always utilize them.

Oct. 27 2011 11:49 AM
listener

Not following the latest pandering fiat from a President trying to get re-elected "is not a decent attitude" but being a cheerleader for him while demanding more "free" stuff down at the OWS protest is?

This is a perfect storm of leftist lies and the start of a great epiphany for many former Obama supporters who will be sadder but wiser by next year's election.

Oct. 27 2011 10:50 AM
Lynn from New Jersey

I am a parent of two students currently attending private and State college respectively. They have private and government loan debits accruing which they will be held accountable to pay upon leaving college. Every year they apply for the loans and sign their promissory notes. My daughters each feel the burden of responsibility. They realize their debt is not to be taken lightly.Their goal is to graduate and attain a job. Although in this economy the future doesn't look bright. Hard work, dedication and confidence in the future is what they strive for. The future is uncertain and I must say that I am very proud of them. As for the colleges and the government loan process, they do a good job of letting students know that no matter where their education leads them, they are expected to pay their debt. Keeping all this in mind, my daughters are reluctant and wary to sign their loans and in fact initially one of my daughters broke down and cried the first time she signed her loan. I feel for all college students who are enlightened to the reality of their own actions regarding the future vs. debt. Shame on the slackers!

Oct. 27 2011 10:41 AM
another Utah Mike from Utah

Chris Galloway disgusts me. He doesn't feel that he should have to pay his loans back? He should have dropped out of college and went to work. Do they even make kids take an economics class in college anymore? After 4 years of attending college part time while working unskilled jobs, i.e. retail and restaurants, I realized that I would not be able to continue without incurring significant debt. I dropped out and joined the military, where I received an outstanding education for free. I got out after eight years with a skill and no debt and as a skilled tradesman, I make more than most college graduates. As far as the gentleman who complained about $300,000 in law school and med school debt - I don't think you are suffocating - you probably are just having a hard time keeping up with your wealthy peers. You must have known that $300,000 in loans would have consequences. Sorry you can't afford a new BMW every year - buy a Ford. I know the military isn't the best choice for everybody - but they would probably pay the med school loans for you if you agreed to serve. The public health service also forgives student loans to physicians working in underserved locations. I know that doesn't fit in with everybody's idea of being entitled to everything - but maybe you should give if you expect to receive. Stop being so spoiled and selfish.

Oct. 27 2011 10:37 AM
H from Pennsylvania

As someone who works in higher education and has first-hand knowledge of the wasteful spending institutions do in the name of "building community"; it's high-time that we take a look at the college and universities themselves. There is no doubt that student engagement is an important aspect of higher education and helps to contribute to the overall satisfaction of the college experience; however, things have gotten out of control. It's embarrassing to me to work in a field that can easily spend hundreds of thousands of dollars a year at one institution to provide free t-shirts, glow sticks and food, only to leave students with close to the same amount of debt after graduation.....myself included. We are asking for government bailouts when it seems no one is taking a closer look at actual spending done by the educational institutions. I'm not sure when higher education became more about expensive programming rather than quality education.

Oct. 27 2011 10:26 AM

I owed well over $100k in 1987. I worked through school, through grad school, and lived the way one has to live in order to pay it all off. So suck it up. If you feel that someone owes you a future because you went to school, it helps explain why you're the one without a job. I'm fine directing my tax dollars to subsidize below fixed interest rates, expanding refinancing options, forgiving a portion for every year you serve the country in some way. But only if a borrower can't get out by simply filing bankruptcy.

Oct. 27 2011 10:14 AM
KarenB from New York, NY

Chris needs re-education. Student loans do not promise you a "lifestyle"! They are a way to help you get an education--one that you CHOSE to get. What planet does this kid live on? Planet Blame Game? So now he's complaining because his dream job wasn't right there after graduation and is now defaulting on his loans until he gets a job he thinks is worthy of him. He has a job already--one that pays $480 a week, but that isn't enough reason for him to not go into default by choice. Great way to help the economy. Talk about being part of the problem.

Oct. 27 2011 10:13 AM
listener

"We were told a narrative our entire lives"

Hello...this whiny student is being told a "narrative" or lie now by an agenda driven media that dishonest "progressive" politicians trying to keep power will rescue you with other people's money.

The next time a college professor is on the program waxing lyrical about their "progressive" opinions, ask him or her how much they make year and if they are willing to take a large pay cut?

...or do we focus just on the banks who give students a voluntary chance to pay the six figure salaries of their brilliant professors in academia?

Government programs cause massive problems so more government programs are created to "solve" them and that is what is happening here.
This student is a perfect example of this culture of dependency and it is a huge tragedy that the media is encouraging.

Oct. 27 2011 09:59 AM
carl, queens n.y.

in 20005, my niece applyed for a j.p.m. chase student loan.. $26,420.00 loan at 8.3%, with a $1,836.68 ''origination fee''..[shake down money]] total payments would come to $71,064.00.. even the ''shylocks'' in the old neirborhood didn't charge us an ''origination'' fee.. this is why i have been trying for years, to have the R.I.C.O. statute changed to the B.A.N.K.O statute.. are they not o.c. at its finest?

Oct. 27 2011 09:56 AM
mark troia from boston

I waited tables for four years after college to pay student loans and support myself. it was a tough road, but my interest was low, fixed for the life of the loan and i was able to take deferments twice. the loan system is harder today and needs to be returned to a consumer friendly / less profit driven system.

Oct. 27 2011 09:51 AM
Frank from Miami

We need college presidents to explain why college tuition has been increasing at a far greater rate than the inflation rate. In heath care, this disparity is explained by advances in technology. Other than adding on-line courses, I don't see where the method for delivering a college education has changed much over the years.

Also, according to Wikipedia, 60 universities have endowments in 2010 exceeding $1 billion. Why are the universities hoarding this money? Can't they use a portion perhaps to pay a portion of the student loans for former graduates or at least hold the line on tuition? The endowment for Princeton is $2 million per student.

Oct. 27 2011 09:47 AM
Laurie Mann from Pittsburgh, PA

The other issue about student loans - the interest rate is much higher now than it was when many of us were in school. Our loan rate for about $7,000 of student loans we took out in the '70s was 4%.

Oct. 27 2011 09:40 AM
Laurie Mann from Pittsburgu, PA

The other issue about student loans - the interest rate is much higher now than it was when many of us were in school. Our loan rate for about $7,000 of student loans we took out in the '70s was 4%.

Oct. 27 2011 09:39 AM
Chris from Brooklyn

For those saying that students need to own up for their loans, I might ask, how well did you grasp economics and finance at 18? 20? Who taught you those skills? I'll bet they were a part of high school at some point, but not any more.
How many of you encouraged your own children (or were encouraged in your own youth) to go to college because there's really no other chance to enjoy moderate success? How many were assured by guidance councilors and financial aid councilors that the loans would not be onerous? For that matter, in what other situation would anyone hand a freshly minted adult thousands of dollars without any income to secure repayment? Comparing student debt to other debts seems a bit of a red herring.
Furthermore, how many students took a loan as a first and preferred option? Loans are taken as a last resort. With stagnant wages, skyrocketing education costs, and a federal system that vastly over-judges a family's ability to cover said costs, what other options were available, except maybe telling our kids, sorry, but we can't afford your future? I've seen people work their way through college. Full time, they could afford one or two classes a semester.
I'm a little incensed at the people that think college students are seasoned adults that fully grasp the ramifications of debt after a lifetime of being told that education breeds success.

Oct. 27 2011 09:34 AM
Mike from Utah

In 2002, a article appeared in Readers Digest about bankruptcy. The article detailed that over 100,000 college students had declared bankruptcy for their student loans.
Orrin Hatch, US Senator from Utah, made a press comment "Anyone who declares bankruptcy is a Irresponsible".
I wrote Orrin because there were so many bankruptcies because of Medical Bills, about 900,000 families every year. No other country in the world permits Medical Bills bankruptcy. None.
In 2002, there were close to 2 million bankruptcies filed, most were for Medical Bills. After the Bankruptcy laws were modified in 20003 with the driving force of Orrin Hatch (R-UT) and Chuck Grassley (R-IA), the student debt bankruptcy was so stringent, that it became impossible as the college students know today that the President is trying to correct.
Bankruptcy was NOT intended to provide a path to financial ruin or slavery of debt from Privatized lending. Allowing Medical Bill debt into a bankruptcy option opened the door for abuse where it was really designed to encourage individuals to take risk in business and if a failed business, the business risk taker could take a 7 year time off to lick their wounds and maybe start over without being debt prison.
Students with college debt and families that had a major illness (900,000 of the 1.6 million bankruptcies in 2010) are the result.

Oct. 27 2011 07:52 AM
Mike from Utah

In 2002, a article appeared in Readers Digest about bankruptcy. The article detailed that over 100,000 college students had declared bankruptcy for their student loans.
Orrin Hatch, US Senator from Utah, made a press comment "Anyone who delcares bankruptcy is a Deadbeat".
I wrote Orrin because there were so many bankruptcies because of Medical Bills, about 900,000 families every year. No other country in the world permits Medical Bills bankruptcy. None.
In 2002, there were close to 2 million bankruptcies filed, most were for Medical Bills. After the Bankruptcy laws were modified in 20003 with the driving force of Orrin Hatch (R-UT) and Chuck Grassley (R-IA), the student debt bankruptcy was tighted so much, that it became impossible as the college students know today that the President is trying to correct.
Bankruptcy was NOT intended to provide a path to financial ruin or slavery of debt from Privatized lending. Allowing Medical Bill debt into a bankruptcy option opened the door for abuse where it was really designed to encourage individuals to take risk in business and if a failed business, the business risk taker could take a 7 year time off to lick their wounds and maybe start over without being debt prison.
Students with college debt and families that had a major illness (900,000 of the 1.6 million bankruptcies in 2010) are the result.

Oct. 27 2011 07:48 AM
Mike from Utah

We need to throw them all out, especially if they were in office more than 10 years and get the right people in office, ones who do not have a philosophy of "punish the borrower" and not the "predator".
Why do banks have so much cash? Because they know, the Financial WMD's are still in place, and the Financial Reform is so weak that a "September 2008" can happen again.
But in the meantime, the foreclosures continue, the One million college grads have 22% unemployment, with Babyboomers cannot retire(100,000 defined benefit plans disappeared with creative Corporate take over schemes "Retirement Heist" Ellen Schultz) and cannot leave their jobs (average 65 year old has $55K in IRA or 401K) to let the college grads work, along with unchecked multinational Corporations offshore and fire in the USA (44 US Republican Senators in September 2010 voted against the closing of the loopholes that incentivize the Multinationals to fire in the USA (2.4 million) and hire Offshore (2.9 million) in the last 4 years.
All this has been possible with the link between the laws passed and not passed by our Congress and the President in the last 30 years for the benefit of Corporations and Financials Predators.
We can escalate a correction but only with Bribery (election reform) and give the President (the only person elected by the majority of the people) and get rid of the Corporate, bank, and Wall Street coddling Congress, mainly the "good ol' boys" in the US Senate.
The rest of the world, China and Russia, are grinning from ear to ear as their economies take over because we such a dysfunctional government.

Oct. 27 2011 07:45 AM
Mike from Utah

When Hatch and Grassly put punishment as the only preventive option for Medical Bills and Student debt rather than going after the Predatory lenders (obtaining Federal funds at 2% and lending at 9% to students for Profit aka Privatizing loans) and the Monopolistic Medical Services Price Fixing with a nationwide of computers in the medical billing of 10% a year price increases for Profit and no anti-trust laws being enforced for Price Fixing Medical costs.
The end result is loss of assets of the American families (in Utah you are allowed to keep $20K in your equity - all the rest must be used to satisfy the Medical bills and if you have Medicaid cover your bills, after getting well, Medicaid (state run) uses "Estate Recovery" to get your assets along with wage garnishment, students who are "enslaved" with debt like having a mortgage and low paying jobs.
WIth student debt and Medical Bill bankrupcy, we are creating a generation of poverty and "debt Prisoners".
The "Let the market decide" and "Get the government off our backs" "Privatization of Student loans (making 7% Profit from 2% Federal Funds) and with the help of bank written legislation pushed through Congress by the likes of Orrin Hatch (R-UT) and Chuck Grassley (R-IA) is an example of just how our Congress have coddled the RIch, the banks, Wall Street, and the 1% while they take bribes from the Lobbyists whose Corporations, banks, and Wall Street write the bills that become law for the benefit of the Financial organizations. The proof is the Forbes Richest 400 who have more wealth than 150 million Americans, and the 65% of whom made their wealth by moving and skimming money from those who work and earn money with toil and sweat. The 260 Billionaires made nothing, invented nothing (except CDO's, Derivatives, CDS's and other WMD's of Financial Destruction) and got away with the 99% bailing them out.
How will this stop? Get rid of guys like Orrin Hatch (R-UT) and Chuck Grassley (R-IA) would be a good start and put the reins on the Predators who make money, from other people's money and pay little or no taxes. Raise the Marginal Tax rates and recognize the Rich will only do the right thing when they are "Incentivized" with higher taxes.
In the meantime, they just keep pouring money into stopping Financial reform (House Republicans are underfunding the SEC to keep the investigative headcount low so the likes of Bernie Maddoff and other Ponzi schemers can operate with being caught), the CFTC and FBI budget restraints are preventing investigations of fraud.

Oct. 27 2011 07:43 AM
Alan Nakamura from Denver, CO

I'm sorry that Chris feels he was "mis-led" because jobs aren't out there for the taking, but there are lots of folks out there in the same situation who are paying off their bills as best as they can. That doesn't give him the right to default on his loans. At times, one must take responsibility for their own actions and the consequences of same.

Oct. 27 2011 07:43 AM

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