Student loans derail many graduates' dreams with crushing debt burden

By Catholic Online (NEWS CONSORTIUM)
7/1/2011
Catholic Online (www.catholic.org)

College graduates owe more than what all Americans owe on credit cards

Many college graduates with degrees in hand go on to get well-paying jobs in the government and private sectors - only to see their hopes for a new home or new car crushed by a mountain of student loan debt. Many students take on as much as $100,000 -- or more in debt to finance their education. Even worse, those struggling with repayment can't default on student loans in bankruptcy, as these loans are federally funded.

Many students take on as much as $100,000 -- or more in debt to finance their education. Even worse, those struggling with repayment can't default on student loans in bankruptcy, as these loans are federally funded.

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LOS ANGELES, CA (Catholic Online) - The problem only threatens to get even worse as states cut funding for higher education and schools raise tuition.

U.S. student loan debt is so high; it has reached $900 billion, more than what Americans owe on credit cards.

"It didn't seem to add up as much as it did that first payment," one graduate says. "That was a big shock and very much a revelation on how much debt I'm in."

The student loan crisis only threatens to get worse. At least 43 states have decreased funding for public higher education since 2008, according to data from the Center on Budget and Policy Priorities.

"Students fall in love with their dream college, they want to go and it doesn't matter the price," Lynn O'Shaunessy, who writes about higher education affordability on TheCollegeSolution.com says. "They just go, 'Oh, we'll pay it off when we get out,' not realizing this is a huge financial burden they're taking on when they're 18 years old. They don't even have a clue what they're getting themselves into."

The student debt problem also affects future generations, Mark Kantrowitz, president of FinAid.org and FastWeb.com says.

"More students are taking on 20 or even 30 year repayment terms, which means they're going to be repaying their own student loans when their children enroll in college," Kantrowitz said. "They're going to be less willing and less likely to borrow for their children's education."

Analysts also point out that an indebted graduate is less likely to donate to his or her alma mater. Saving for retirement isn't even an option.

To better educate potential college students, colleges in the U.S. will need to create online "net price calculators," as specified by a federal requirement. These calculators will help prospective students and their families estimate how much certain colleges will cost them after grants and scholarships are factored in

However -- borrowing some money to attend college is a good thing, O'Shaunessy says.

"Some debt is good because it gets you in the game and it gets you a college degree, and you absolutely need that," she said.

� 2011, Catholic Online. Distributed by NEWS CONSORTIUM.

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General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
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Keywords: Student loans, student debt, colleges, cost-of-living

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1 - 4 of 4 Comments

Gordon Wayne Watts
1 year ago
Your article correctly points out Student Loan debt is rising (implying that college tuition is rising), but you don't say **why** --and thus you can offer no solution -- allw me to help:

Every time Congress raises the loan limits, universities find new excuses to increase tuition --to obscenely high levels.

THAT is why 'financial aide' is NOT aide to the student, but rather only aids the colleges, which are dishonestly profiteering off the student, who is just trying to better himself/herself.

Therefore, to stop distorting the Free Market, all State & Federal funds (grants, loans, guarantees, etc.) need to STOP being used for Higher Ed -and then tuition will drop like a rock.

Another problem is the colleges & lenders know the student can not obtain bankruptcy for his/her student loan --but if standard consumer protections (bankruptcy, truth in lending, etc.) are returned to Student Loans, colleges & lenders will STOP sticking it to the student, as the bankruptcy option will give an overcharged student the means to fight back.

That is why I support S.B. 1102 (Fairness for Struggling Students Act of 2011) and
H.R. 2028 (Private Student Loan Bankruptcy Fairness Act of 2011) --it won't help me (as I had a public loan), but it would be a good start.

I don't know why Democrats are the only once supporting this Free Market check and balance on distortion of the price of tuition, but Republicans have stopped being conservative, I guess, and don't care that these bills are Free Market Capitalism --nor do modern-day Republicans care about 'Less Government' or else they would defund & eliminate both the Department of Education AND also the Federal funds for so-called Student aid. (I'm ashamed to be a Republican anymore.)
Graeme
1 year ago
"Some debt is good because it gets you in the game and it gets you a college degree, and you absolutely need that," - How on earth can saddling young people with debt ever be good? Each generation gets poorer and poorer as we continue to pay more and more for things we are told are "absolutely necessary". What we need is to get ourselves and our children OUT of the stupid game. Wake up. We're in a casino and the house always wins.
Emily Morgan
1 year ago
What is probably unknown to most students, is that the student loan nondischargeability provisions came up at the last minute over the opposition of key legislators. Both the primary co-sponsor of the 1978 Bankruptcy Code (Rep. Don Edwards) and the Chairman of the House Subcommittee on Postsecondary Education who over saw the Education Amendments of 1976 (Rep. James O’Hara) objected to the introduction of a student loan nondischargeability rule. O’Hara protested bitterly that Congress was “fighting a ‘scandal’ which exists primarily in the imagination” and that the amendment “treats educational loans precisely as the law now treats loans incurred by fraud, felony, and alimony dodging”. The evidence of a lower than 1% discharge rate of federally insured student loans in bankruptcy did not block the nondischargeability provision from entering the Bankruptcy Code — this even so under a comparatively liberal Congress that passed the debtor-friendly 1978 overhaul of the Bankruptcy Code.
http://cashadvancesus.com/student-loan-debt/
William Bell
1 year ago
My wife, from a lower middle class family and the first in her family to ever go to college, graduated with a Masters in Education from Missouri State University (1990). Even though she worked no less than 35 hours a week while in school she still ended up owing $35K. She was paying off her various student loans just fine and teaching at an elementary school when our son was born with a life-threatening malformation of his trachea, due to her having caught chicken pox from one of her students. Our insurance company would only pay 85% of a $250K hospital bill (was the chicken pox a pre-existing condition?). To more easily make the payments she consolidated all of her loans with Sallie Mae, thinking they were a government institution, as they had been when we started college (but hadn't realized had turned into a privately run institution that was now government sponsored/taxpayer funded). It was too tough to make all of our payments to the doctor and Sallie Mae, especially since the doctor told us that one of us would have to stay at home (and I had to quit my entry level graphic arts job) with our son if he was to survive his first year of life, due to his weakened immune system. Our parents all needed to work full time so I stayed at home with him since our insurance was through my wife's job. We made the payments the best we could, but a payment not-in-full to Sallie Mae meant her loan got sent to a "collection agency" (which it turned out was also owned by Sallie Mae). Then her loan got bought out by another "collection agency" and the next thing we knew she owed over $46K and her wages were now being garnished at 10% per paycheck, which didn't even pay off the interest on her main balance. Fast forward to today and to date my wife has had over $45,000 garnished from her two jobs as a public school teacher and part-time youth worker at our church, and the current total she now owes this "collection agency" is almost $90,000! Basically, she is a modern day economic indentured servant. Like the article stated, students in her situation will owe great big debts even as their children are of age to attend college. By the Grace of God, our son survived his ordeal and is now in college, due to his grandparents scraping up enough money to pay for what the HOPE Scholarship of Georgia didn't pay for (anything not tuition). It looks like he will get to go to college at least one more year since he kept his grades up enough to keep HOPE. We will scrimp and save for another year and hope he keeps his HOPE Scholarship for his junior year as well, but if he doesn't then a very bright child will have to drop out. As for us, my wife's student loan debt just keeps growing even as I write this letter. When our alma mater calls for donations we just politely tell them we can't afford it, because it would be too long a story to tell them why. What was my wife's crime: being from a poor family, yet being bright enough to earn a Masters degree and also the unlucky medical hardship with our son, though we thank God every day for the blessing he gave us.

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