The More You Know, the Less You Owe

Wednesday, July 18, 2012

student loan debt burden (thisisbossi/flickr)

Americans owe more than $1 trillion in student loans, and without the proper financial knowledge, people like Secretary of Education Arne Duncan fear that this debt will only increase over time. 

Beth Kobliner, author of "Get a Financial Life" and a member of the President’s Advisory Council on Financial Capability, is promoting educational programs that are starting to be implemented to address the problem of student loans. One of these programs is run at John Hancock High School in Chicago by family outreach coordinator and parent advocate Hector Gonzalez.

"Unfortunately, picking a college based on a gut feeling or a beautiful campus is something that's still going on, but it's really a luxury that families can't afford," Kobliner says. "It's really time for high schools to get practical, because students and families really need that guidance," Kobliner says.

"They have to factor in everything — from the financial aid they'll get from the school [and] the federal financial aid they're eligible for, to a school's dropout rate and what kind of job success the school has, because these are really critical questions parents and students need answered." 

While on a tour through Chicago's South Side, Kobliner met Gonzalez, who she says has figured out a way to obtain grant money for his students that has enabled them to apply for college. 

"That's just one of those really courageous conversations that we have to have with our families, particularly with Latino parents, mainly because finances is a private matter, so they don't even want some of their children to know that they might be going through bankruptcy," Gonzalez says. 

"The fact of the mater is that when we start having these conversations with our parents about what financial aid is, what FAFSA is, and how that accounts into alleviating some of that debt, or at least having some sort of money to attend college, it really gets them [thinking] 'you know what, I think it is possible." 

Gonzalez also encourages students to take a look at their lifestyles to see if they are spending money unnecessarily. He points to the $100 a month he spends on coffee, and how that money could go towards his child's education. "It adds up," he tells his students. "Every cent counts." 

Kobliner believes that schools across the country can follow Gonzalez's example. "Schools can really encourage kids to fill out the FAFSA (Free Application for Federal Student Aid) form, like Hector does," she says. "There are two million students who could get Pell Grants [but] don't because they don't know that they're eligible." 

"Families have to follow his lead, as do high school counselors, to educate families about how they can get more aid." 

Guests:

Hector Gonzalez and Beth Kobliner

Produced by:

Robert Balint and Elena Holodny

Comments [5]

Mike from California

These students need to work a little harder and think outside the box for funding these days. We are working a lot harder at getting my daughter through school then we had to for my son. A lot of the funding we got for him has been cut or is gone.

Regardless we are trying to stay away from student loans for my daughter. Instead we all are working a little harder to save money so we don't have any debt/interest later. We also managed to get a few grants and scholarships and doing the thing over at comoinis.com. We just started there but already got $2,300. All gifts from our community investing in my daughter and her and our future.

Jul. 18 2012 01:21 PM
Jesus Vazquez from Yuma, AZ

I recieved financial aid and applied for many scholarships. I paid $0 for my A.A. Degree and $0 for my B.A. Degree. For my M.A., I paid close to 20K, if not more. However, I never took out any loans. How did I do this? Worked full-time when I graduated from college and lived with my parents. I am now en-route to seeking my doctoral degree with zero loans.

Jul. 18 2012 12:42 PM
jack

I come from a very poor family and paid for every penny of my 4 yr. degree myself. I worked full time all the way through college, which acually made me uneligible for pell grants. I ended up with 10k in student loans but I have no problem paying them back, they were a great help. I went to a small state university that was affordable and got a degree in accounting and have had a great job ever since graduating. I think if everyone had to work and pay for their own college they would select wiser degrees and take it alot more serious.

Jul. 18 2012 11:49 AM
Christina from Central city, pa

I was very lucky that my parents taught me about money and debt from a young age. I started working at age 14.5 (state law) and saved religiously. I graduated high school with ten thousand dollars saved up, applied for college, got in to a good state university, and went to college with a budget. I worked part time my first year as an editor's assistant, which pays higher than minimum wage; and worked full time the first two summers. I moved off campus sophomore year to more affordable housing (it was nicer than a dorm too!). I started working full time during the semesters and planned my classes around that- lots of 8am classes, and some online classes. I paid my way, and graduated a semester early with NO debt. Also, my full time job pai off big time by giving me a great resume and skill set and I was gainfully employeed the day I graduated. Thanks to my parent's lessons and a healthy dose of frugality, I'm employeed, and buying a house next week. I'm 22.

Jul. 18 2012 09:31 AM
Michele Pitzer from Middletown, NJ

My husband and I owe a ridiculous amount in student loans. We didn't get any help from our parents, so we took out loans to pay for undergrad and grad schools. We are both social workers. I have been home raising our kids for the past 7 years and he has been killing himself working just trying to stay above water. Unfortunately, you could work 24/7 and never make enough to pay for those loans on a social workers salary. The rate at which they grow is impossible to catch up with. We have consolidated (which was a mistake) and have tried to negotiate with Sallie Mae, but they just won't work with us. We had to claim bankruptcy last year, but of course the loans are still there looming over us and out kids. I fear that our children will be paying Sallie Mae for us long after we are dead( because the loans don't go away when you die, your kids then become responsible for your debt.) It's all so discouraging. We are both despondent.

Jul. 18 2012 08:00 AM

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