Student loans and debt

[kit'n]

Student loans - a life sentence
Forget about getting married and buying a home. This generation is thinking about next month's payment.By Christian Zappone, CNNMoney.com staff writer
May 1, 2006: 4:25 PM EDT


NEW YORK (CNNMoney.com) - Mayrose Wegmann, 25, should have been starting on her dream career as a political consultant by now. And saving toward her first home.

Instead, Wegmann, who graduated with a degree in political science and journalism from the University of Iowa in 2004 and moved to Washington, D.C., is working at a non-profit because it pays significantly more than entry-level politics work. And she won't even consider buying a home for several more years.

In fact, she won't consider much except how to meet the $300 a month she owes on her $34,000 student loan balance.

"The school debt makes you decide [about your career] based on the money factor. Not based on what you want to do," said Wegmann.

The Class of 2006, set to graduate this month, will soon be in the same boat.

Approximately two-thirds of all students use loans to pay for their higher education, according to the Center for Economic and Policy Research. The average debt is $15,500 for public schools and $24,600 for private – many students rack up even more on their credit cards.

Call it a reverse dowry: college debt diverts careers and delays or impedes graduates' plans to get married, buy a home or even to start a family. The effects can last years.

A 22-year old student graduating this year who consolidates their $40,000 loan at 6.125 percent will need to pay $243 a month...until they're 52. By that time, they will have paid $47,494 in interest alone.

A reverse dowry
"My student loan debt is my biggest source of stress in my life at the moment," said Steve Desroches, a 2002 graduate from Columbia University's Graduate School of Journalism. "I live paycheck to paycheck."

The degree left Desroches, who works for a newspaper on Cape Cod, $50,000 in debt with no savings. He's unable to buy a needed car or to even think about entering Massachusetts's "out of control" real estate market.

The repayments were so financially restrictive he briefly considered declaring bankruptcy, until he learned it wouldn't affect his student loans because they're federally guaranteed.

"My feelings about my degree now? My graduate education was invaluable [to my career], but it wasn't worth $50,000, or more accurately, it isn't worth the debt. My options are definitely limited."

Christine Moellenberndt of Sacramento, California has given up on the idea of owning a home, at least anytime in the next 10-15 years. She graduated last June from the University of California, Santa Cruz with a degree in anthropology, and moved back in with her mother when she realized not doing so would mean living paycheck to paycheck with no chance of paying down her debts.

"That $675 I could be spending in rent could also be a good chunk of a credit card payment, or a huge payment for my student loans. I see that as a bit of a better investment than living on my own and struggling paycheck to paycheck."

Moellenberndt says at least half her monthly income working at a state regulatory agency goes to pay off her $18k in federal student loans. And although the debt is daunting, her plans to become a community college professor call for an advanced degree...hiking her debt in the future.

A growing issue for the economy and society
The cumulative effect of such student debt on graduates is unclear, although few would argue that its impact will be positive for the graduates, the economy or society.

"We've never done this to a generation of young people before," said Dr. Heather Boushey, Senior Economist at the progressive Center for Economic and Policy Research. "We've never put a generation in their 20s in debt they can't get out of before they started their work life."

"The normal approach in any healthy society is to help young married couples get started in life through marital gifts, dowries, and the like," Allan Carlson of the socially-conservative Howard Center for Family, Religion, and Society said.

"We now burden many young adults with student debt, sometimes massive in nature; the price being paid includes marriages delayed or foregone and fewer children. This is foolish public policy."

http://money.cnn.com/2006/05/01/pf/c...ex.htm?cnn=yes
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so, how much school debt does everyone have and how long do you anticipate it to take you to pay it off?

im graduating in a couple weeks and i have about 38k in debt, plus 4k credit card. im moving back home with my mom to focus on getting my debt down by at least half with in 1-2 years. my goal is to pay about $1000-1500 a month for as long as i live with her.

other people? what are your plans?

[matt]

my work paid/pays for all of my school, so $0. i feel your pain though, as my cousin owes around 80k for his education. sux.

[Dionysos]

This is why you bust your ass in high school so you get grades good enough to qualify for grants.

[Ryan]

One can work their way through school without having to go into massive debt. If your goal is to slack off and get wasted every day while in college then yes, you'll have to take out huge loans that will put you in debt for years. I think most college students are just lazy.

[PETA]

Originally Posted by kit'n

"The school debt makes you decide [about your career] based on the money factor. Not based on what you want to do," said Wegmann.

Sacre Bleu!

You mean I cannot become a pet psychologist specializing in dromedary camels? Travesty! Injustice! The tyranny of the American government on full display.


Shakes head walking away wondering how in the world some one would ever think that there should be jobs with gold plated bathrrom fixtures for 15th century philosophy majors.

Originally Posted by kit'n

so, how much school debt does everyone have and how long do you anticipate it to take you to pay it off?

> 6 figures

< 10 years

Originally Posted by Ryan

One can work their way through school without having to go into massive debt. If your goal is to slack off and get wasted every day while in college then yes, you'll have to take out huge loans that will put you in debt for years. I think most college students are just lazy.

the author of that piece sure seems to think that the debt entitle her to a well paying job

[kalamu]

Originally Posted by Dionysos

This is why you bust your ass in high school so you get grades good enough to qualify for grants.

i don't claim to be a genius when it comes to grants... but doesn't it have more to do with how much money you make in a year moreso than what grades you got? i thought scholarships were based on grades.

but yes, students need to be better educated on financial aid most likely. i know students here rarely know how much money they could be getting in grants/scholarships because they don't even try to get them and they just accept loans instead. and of course they rarely know what they are getting themselves into with the loans.

[GLopez]

Originally Posted by kalamu

and of course they rarely know what they are getting themselves into with the loans.

you would think that a 'college student' would be smart enough to figure that out.

[PETA]

Originally Posted by GLopez

you would think that a 'college student' would be smart enough to figure that out.

don't kid yourself

the average eighteen year old college student may be very bright and academicly inclinde - but is still a complete idiot when it comes to dealing with the real world. I speak from personal experience on this one.

[GLopez]

Originally Posted by xian

don't kid yourself

the average eighteen year old college student may be very bright and academicly inclinde - but is still a complete idiot when it comes to dealing with the real world. I speak from personal experience on this one.

I read in article a while back that a high percentage of college students and college graduates do have a hard time balancing check books, understanding interest rates on loans, credit cards, etc.

It was a pretty interesting read.

With those numbers (can't give you an exact percentage, but it was high), it would be nice to see high schools start teaching students real world situations, so that when they do step out of the front door, they have an idea of how the world operates on the outside.

[matt]

Originally Posted by GLopez

With those numbers (can't give you an exact percentage, but it was high), it would be nice to see high schools start teaching students real world situations, so that when they do step out of the front door, they have an idea of how the world operates on the outside.

aren't parents/families supposed to do that? i didn't learn anything about balancing accounts from the school system, and i don't think it should be their concern.

[kalamu]

Originally Posted by xian

don't kid yourself

the average eighteen year old college student may be very bright and academicly inclinde - but is still a complete idiot when it comes to dealing with the real world. I speak from personal experience on this one.

especially when it comes to money. my parents used to make fun of me all the time by making me guess how much they made in a year and how much their morgage was and things like that. when i'd answer they'd both start laughing at how clueless i was about money.

fucking jerks

[emphatic_apparatek]

Originally Posted by GLopez

I read in article a while back that a high percentage of college students and college graduates do have a hard time balancing check books, understanding interest rates on loans, credit cards, etc.

It was a pretty interesting read.

With those numbers (can't give you an exact percentage, but it was high), it would be nice to see high schools start teaching students real world situations, so that when they do step out of the front door, they have an idea of how the world operates on the outside.

My senior year in high school I was required to take a class called Math And Money. It basically taught us how to finance a car, balance check books, loans, mortgages.. stuff like that. It was a math class for real world math. Stuff we ACTUALLY needed to learn instead of geometry and all that other BS. I think all schools should require their High School Seniors to take this class esp right before graduation when they'll actually be getting a taste of the real world. I got my taste at 17 when I was kicked out of my parents. It's a lot to take in that young.

[Dionysos]

Originally Posted by kalamu

i don't claim to be a genius

Finally!


Yes, finances do play into it sometimes. However my parents made a nice chunk of change and my sister had no problems finding grants since she busted her ass in school.

[GLopez]

Originally Posted by matt

aren't parents/families supposed to do that? i didn't learn anything about balancing accounts from the school system, and i don't think it should be their concern.

I'm with you 100%.

I don't think it should be the responsibility of the school system either, but unfortunately, how many parents take responsiblity in their childs studies anymore?

Aside from certain studies (if not all studies), it is the responisiblity of the parents to teach their children real world situations. But, even now, I hear students talk day in and day out about learning information that probably won't help them in the real world (at the moment anyway).

If that's the case, and again it's unfortunate that the school system should take on such a burden.. but why not offer a quick class in balancing check books, interest rates on credit cards and such. Maybe even a section or two in a math class, dedicated to personal finance.

...and they might do this already. It's been a while since I've been in high school.

[GLopez]

Originally Posted by emphatic_apparatek

My senior year in high school I was required to take a class called Math And Money. It basically taught us how to finance a car, balance check books, loans, mortgages.. stuff like that.

There it is!