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Tuesday, May 15, 2012

Graduating College With $120K In Student Loan Debt

Kelsey Griffith of Ottawa, OH, graduates on Sunday from Ohio Northern University with $120,000 in debt. (Courtesy Kelsey Griffith)

College students graduating this month are leaving school with more than their degree. They also have record levels of student loan debt.

In 2011, the average student loan debt for all borrowers was $23,300. Ten percent owe more than $54,000 dollars, and three percent owe more than $100,000 dollars. That amounts to more than one million people owing six figures for their education.

Student Faces $900 Monthly Payments

Among them is 23-year-old Kelsey Griffith of Ottawa, Ohio, who graduates on Sunday from Ohio Northern University with a degree in marketing.

She has about $120,000 in student loans, and her monthly payments of about $900 begin in two months. She’s working two restaurant jobs and doing some marketing for a photographer, in order to make those payments.

“I felt that just because my parents didn’t make a lot of money, that I should still be able to go to a great university like Ohio Northern,” Griffith told Here & Now‘s Robin Young. “I was really stubborn. I wanted to go to college wherever I wanted. I wasn’t going to let anyone tell me I couldn’t.”

Ohio Northern Grads Among Most Indebted In Country

At Ohio Northern, tuition and fees, room and board and living expenses total about $48,000.

Recent graduates from the school are among the most indebted of any college in the country. According to 2010 data, students graduate from Ohio Northern with an average of $48,886 in debt. But Griffith said she’s optimistic that she’ll find a way to pay it off.

“I know I am in a lot of debt right now. And that is kind of scary, especially now that it’s become real for me. But I am really confident that the good education I got at the amazing school that Ohio Northern is, you know, I’ll be able to find a job soon and get my loans paid off little by little,” she said.

‘A Perfect Storm For Graduates’

Grace Bartini, ombudsman for American Student Assistance, at Here & Now studios at WBUR in Boston. (Jesse Costa / Here & Now)

“The high cost of college, the borrowing and the fact that people can’t get jobs — it’s just a perfect storm for the graduates now, as well as the older students and the parents,” American Student Assistance ombudsman Grace Bartini said. The group helps people manage and pay off their student debt

“It’s very important for people who are thinking about where to go right now and how they’re going to finance their education — they have to think about what they’re getting into,” she said.

“But we have to remember, going to college and making that decision — especially if you heard Kelsey, her family doesn’t make a lot of money — it’s a dream. It’s very emotional. It’s a way to fulfill the American dream,” she said.

Bartini says families have to remove the emotions from their decision-making process and look at it with “with common sense and some responsibility.”

“At the end of the day, the colleges want the students to enroll. And they have a way for them to pay, and that’s through loans. So the responsibility does really end up with the families,” she said.

The responsibility for making sure students do make smart financial decisions lies jointly with the Department of Education, the colleges and the families, Bartini said.

Not Just Young People Struggling

It’s not just young people struggling with student loan debt. Parents are taking on their debt as well, and some have debt of their own. Last week, we spoke to 58-year-old Sandy Barnett in Illinois, whose wages are being garnished as a result of defaulting on her federal student loans from the 1980s. She originally took out $21,000 in loans, but the amount has since ballooned to more than twice that. She now struggles to afford her basic living expenses like food and the gas she needs to get to work.

We put Sandy in touch with Bartini at American Student Assistance. Sandy is now working with the U.S. Department of Education to get her loans out of default, as well as apply for an income-based repayment plan.

Bartini said she believes that Sandy will be able to rehabilitate her loans and get back into good standing.

“The good news is the federal [loan] programs – the U.S. Department of Education – realizes that people are struggling. And the key is for people to know what their options are, and match those options with what their needs are.” Bartini said. “[Sandy's] payments were too high. And one of the things she’s going to do, and can do, is apply for financial hardship. She had tried to do that, so her payments would be lower than the 15 percent, but she hadn’t completed all of the documentation.”

Bartini said there are resources available that should prevent borrowers, like graduating senior Kelsey Griffith, from defaulting on their loans in the first place.

Griffith could also be eligible for an income-based repayment plan, if she ends up struggling to make payments on her federal loans. There are fewer options available for repaying private loans, Bartini said.

Note: An earlier version of this story cited a New York Times analysis of the latest data from the U.S. Department of Education, reporting that 94 percent of students who earn a bachelors degree borrow money to pay for it. That statistic has since been retracted by the Times.

Guest:

  • Kelsey Griffith, graduating senior
  • Grace Bartini, ombudsman for American Student Assistance

Please follow our community rules when engaging in comment discussion on this site.
  • Dana

    Don’t Get Suckered by Josh Lawson. Great book about how to graduate college without crippling debt. Check it out!

  • Margib

    When wee start to see problems like massive student debt, mortgage foreclosures, even obesity, we always hear from the media and politicians that people are not acting responsibly. Perhaps that is true in some cases. Our biggest problem in this country seems to be trying to apply individual solutions to systemic problems. This and the others mentioned are systemic! We need to change the systems that created the problem.

  • DK

    It is totally unrealistic to believe student loan borrowers can be “realistic” about pending loan burden. EACH AND EVERY college-loan borrow dreamily believes that he or she will be THE ONE who succeeds, who gets and deserves the great job, and because of that degree, live a prosperous life. The American dream is too deeply ingrained to “see reason.”

  • Glenn Koenig

    The problem starts at the elementary school level.  I’m not kidding.  The entire public education system has become a huge scheme designed to deliver crops of vulnerable students to colleges, ripe for the picking.  How do they do this?  By focusing too much on academic achievement above other life skills.  By creating a restrictive competitive environment by the use of grades, tracking, and other means.  This is nothing more than adults manipulating children to their own ends without realizing it.  This destroys most children’s natural curiosity and self-directed learning path and harnesses it to serve academia.  It may seem counter-intuitive to such adults, but children know more than adults what is worth learning.  That’s because adults are worse at predicting the future than children.  Adults suffer from the burden of experience of the world that has gone by, which clouds their ability to think openly about where we’re headed.
    Colleges are all too happy to take advantage of the students we graduate from high schools, obedient, frightened of not getting a college degree from a ‘good’ college, and thus willing to pay almost anything to get it.  Add in government financial aid, which allows colleges to increase prices and still lure the students in with promises of ‘aid’ just like sale coupons for milk at the grocery store to lure in shoppers.  The system is horrendously corrupt and on the verge of collapse.  All that’s needed is enough of a crisis for adults to finally realize that the college president has no clothes.

  • Anastasia

    It’s really unfortunate that the “solution” to this problem is being discussed in terms of counseling poor students to accept an inferior education, rather than how to bring the best education in reach of our smartest and most qualified kids. I am $120k in debt for an Ivy League education. There are a lot of days where I feel like this was a mistake, but without question, after going to both a community college and a state school to get there, the education I got was far superior. I worry about this narrative turning from how do we make the best educations affordable to how do we tell talented kids to settle. 

  • Clhplh

    I am sorry but I do not understand why college students do not work to help alleviate their own debt while in college. My husband and I graduated with Masters Degrees and over 60 K in loans (for the 2 of us) in the 90′s. But we both worked the whole time we were in college and grad school. When you are in college, you actually attend class fewer hours than you do in high school and the money we earned working helped us to keep our loans down. I have little sympathy for the kids who take the max. amount they are allowed yet do not contribute a single penny of income for four years.

  • Underemployed attorney

    I think you’re missing an entire segment of this problem. Many undergraduates who are graduating facing a poor job market and giant student loan debt are simply choosing to go to graduate school instead. Graduate school will exponentially increase their debt load, and it’s not something that many of these students seem to be thinking about. 
    As someone who graduated from law school one year ago with $140,000 in debt (all but $6,000 of that from graduate school), and is STILL looking for full-time work, I can attest to the immense burden of graduate school loans.  I’m facing a monthly payment of around $1400 a month on the standard repayment plan.  I started school before the economy on the west coast really hit the skids, and graduated into a completely different world. 
    Students today have the advantage of being able to plan for the bad economy. These students graduating from undergraduate institutions should hunker down, move back to their parents’ homes if necessary, and work hard at finding a job.  Going to grad school by “default” is an expensive and bad idea. 

  • louisl

    We as parents need to stop touting the “money is no object” principle to schools. The reality is, that in most trades, the school “brand” has little impact on job quality. Cost should be the #1 or #2 factor.

    In the mid-90s I went to a state school, and it cost $900/semster. I paid for most of it myself, and I felt I got an invaluable education.

  • Butterpecantoffutti

    I will complete my undergrad degree with approximately $100K.  If I had been better advised on the cost of education, I would have taken a different avenue.  My school originally told me that as long as I’d declared a double major I would be eligible to receive funds to cover both degrees.  This is true; however, they neglected to mention the cap on federal loans and that because of my family income I would reach that cap before being able to complete both degrees. *sigh*  I would have worked towards the useable degree (Medical Technology) first and then went back to complete the second degree (BS-Biology).  Completing the biology requirements first and ending with the Med Tech degree made more sense to me since the latter would have been the degree that could get me a paying job.  I now know (unfortunately too late) that this was not the route to go.  Thanks for airing this story!

  • Cesar A. Marquez

    The Direct loans are no willing to negotiate a lower interest payment to paid the actual debt and and interest-  I have called to negotiate a 5 year paying program over the course of 5 years – Instead all I get is the fact they want me to pay the debt over 25 years- that is insane! and rediculos

  • Starving Artist

    I defaulted on my student loans due to some terrible financial struggles with my parents so my principal went from $42,000 to $89,000.  Even though I went through “default repair”, I don’t have the default on my credit report, but I owe way more than I could possibly pay right now.  My interest alone is greater than 35% of my monthly income.  Tell everyone you know to never let their loans go to default status.  It will screw your income for the rest of your life.

    • Grace Bartini: ASA Ombudsman

      Congratulations on recovering
      from default!  I’m not sure if you have private or federal student loans
      but if they are federal, have you looked into the Income Based Repayment (IBR) option
      that was mentioned during the interview?  This could reduce your payment
      to a more manageable amount and after 25 years on this plan (ten if you work in
      public service) any remaining balance will be forgiven.  You can find out
      more about this option from your loan holder or at http://www.ibrinfo.org    

  • ThisIsNotBritannica

    Your guest is wrong per her statement that student loans can not be written off under bankruptcy.

    These loans can be written off if the person seeking to discharge the loans is able to meet the Brunner Test. (Per the Federal Court, 2nd Circuit.)

    The test is very stringent, but it is available and your guest should not seek to misinform people that it is not.

    Thanks.

    • Grace Bartini: ASA Ombudsman

      Great catch!  ThisisnotBritannica is correct that the Brunner test for bankruptcy is an exception to the rule that
      education debt is not dischargable in bankruptcy.   Some courts will
      make this exception to the non-dischargability of education loans if it can be
      proved that though they have made good faith attempts,  there is no way at
      any point that the borrower will likely ever be able to pay their student loans
      and to do so would result in less than a minimum standard of living.  They
      must also show that this situation is unlikely to change.

       

      Thank you for making this comment – it’s an important point.

  • homebuilding

    Arithmetic counts.

    Whenever you want something–someone else is selling.

    “College” has been oversold for some time–followed directly by over pricing.

    Employers are begging for skilled workers–with actual work skills; knowledge of tools and how stuff works, etc.  (some college completely optional)

    Summers are well spent in physical work apprenticeships

    ….and your chances of having heard this from parents or ‘guidance’ offices are slim, indeed

  • Pconroy

    Robin,

    Your article on debt for college graduates was very interesting. Your guests and you did not touch on the cause of student debt. Where are the parents? Do these kids have anything but a credit card or a lesson in how to balance a check book? I have watched my step-children, and many others that I have hired out of college, not know what a savings account is. As a parent we are supposed to give the skills on how to SAVE money as well as spend it. E.g. My first allowance was 3 cents. 1 penny went to the church, 1 penny to my savings account and the last penny I could spend at my leisure. Of course I bought my first bicycle for $10 out of that spending money. I borrowed Mom’s car through High School, I had jobs from age 10 delivering papers and babysitting. All the dollars I earned were divided up into savings, giving and spending. By the time I graduated HS I had $10,000 in the bank. I had jobs through college…instead of sleeping a hangover off on Saturday mornings I worked at the Cigar Store nearby, with a hangover. I got my first car from Dad when I graduated college — a $600 ugly beast. Graduating from a private college in the Midwest was an expensive proposition, but with a bit of forethought by my parents, and very little by me I was without debt.

  • Jesse Mathey

    I graduated from ONU in 2006 and can attest that Kelsey’s debt situation is not unique to this college.  Many of the people I graduated with were carrying over $150,000 in debt for 5 years in the engineering college at $30,000 a year.  ONU is a prestigious education, but prestige costs money and that fact must be reckoned with.

  • Vralsted

    I am 54 years old and because I lost my income several times in my life and felll behind on my student loans they are now close to 450,000. I have tried every thing I could and I have no luck in any kind of forgiveness.

    • Grace Bartini: ASA Ombudsman

      I’m not sure if you have fedeal or private student loans but based on the balance I will assume that it might be some of each.  There are not a lot of lower payment options for private student loans but it never hurts to check with the loan holder as all private loan programs have different options.  If some of these are federal student
      loans there are a couple of lower payment options that may help you.  In
      an earlier response I talk about IBR which keeps the payment
      to no more than 15% of your income minus an allowance for family size then
      forgives any balance left after 25 years’ worth of payments.  If you work
      in non-profit or other public service that could be reduced to ten years. 
      The income contingent plan under the Direct Loan program has a similar theme
      but the calculation is slightly different.  There are calculators at http://www.ibrinfo.org and the Direct Loan website
      that may help you determine how these plans would assist you

  • Robin Y is Phenom

    I feel for her and hope she and everyone like her can find a way out of debt. She is also very cute. Wassup Kelsey!

  • Dan

     Paul Combe, who received
    $364,300 in 2010 as CEO of the “not for profit” ASA.org group you had on your show today.  Here’s the link from bloomberg.com: http://www.bloomberg.com/news/2012-05-15/taxpayers-fund-454-000-pay-for-collector-chasing-student-loans.html

  • Brocktorrie

    What a living nightmare,  I remember Elizabeth Warrencommet on Private Student loans
    she said something that summed it all up.  The rules private student loan companies
    have make mobsters envious.  The interest rates are variable ours range from 4%
    to 10%, when in default or hardship the interest never stops.  Tried to make good faithpayment for two years which they accepted and cashed.
    Surgery, unemployed, parents helping with living expenses, how I made payments.
     Tried to re finance
    when our credit was good, but The Student loan company would not release the
    loan, letter stating this ( seems illegal to force us to keep the loan when we could have
    re financed) But this guarantees the Student loan company a customer for life. 
    Hence, the Mobster would be envious.  Now we are being sued by the student loan
    company, the amount is so big now they divided it into three seperate law suites.
    Tacking on the hourly legal fees for three law firms, and court costs. Try getting
    a good job at a discent company. When theyrun the credit check and they do
    they will not hire you because you are now a risk.  So the very thing I am trying
    to do to earn a good living and pay the loan back ( over 50 years now I am sure)
    is unattanable because no company will hire me.  This has been a horrible nightmare
    for me and my parents. My dad co signed and is not well
     my dad is in his late 60′s and has been declining in health since this all started.
    So, the student loan company don’t break knee caps, they just ruin your life.
    If they would have let me refinance my student loan and get a fixed low interest rate
    I may have been able to handle the payment, but they would not they wanted the $950.00 montly payment. Even in this financial mess the country is in and the
    unemployment as high as it is they would not budge. GREED, GREED, GREED!

    • Plumucci

      I am so sorry to hear of your nightmare.  But you’re not done yet.  Don’t forget to add to it (a) how EASY it was to get the money, (b) how NOBODY explained your payments or rates of interest when you borrowed, (c) you were a CHILD when you borrowed without any credit history (d) that your school KNEW a good portion of students would never be able to pay these loans back because they know their own jobs-to-graduate statistics, but they wanted the government money and chose to keep their mouths shut. 

      • Brocktorrie

        Thanks for the info.  Yes, very aggresive financial counselors at
        for porfit schools. And Private loans are not eligible for the IBR
        (income based repayment plan) and as stated in my last commet
         they would not
        release the loan, tried to re finance a few years ago allowing
        students to re fi at a fixed/ lower interest rate. But, NO the
        loan co did not want to release this (meal ticket) loan 4% -10%
        interest variable.  Studenet loan companies know there is nothing
        students and parents who co signed can do. There are thousands of
        complaints on the internet regarding the way schools for profit or non profit conduct their sales pitch for the student
        loans, I am sure if someone digs deep enough the schools that
        signed so many naive students up for these high interest
        loans received some very nice bonuses from the Student loan
        companys.  You are right there placement after graduation
        was terrible, the schools received their money, so they did not worry
        the school knew all along the burden now is on the student and
        their families.  I have been hearing that Student loan Debt
        now exceds Credit Card debt.  Someone said how does that make
        sense. People knowing they can discharge Credit card debt so
        they rack up thousands and thousands of dollars just to discharge it.
        Thats legal, but students who can’t find work and struggle to pay
        get sued, bad credit so they can’t re finance, or apply at a good
        company because their credit is so bad. What a mess. We wrote
        our Senators, Congressman, Dept of Education, Governor
        Attoney General, and no one could help.  Sick, Sick, Sick.  

  • Sjw

    The fed gov is the main reason for this huge debt bubble, created just like the housing bubble. they are subsidizing the outragoeous college tuition bills, million dollar salary of college presidents and staff, coaches, etc. the more the fed gov taxes us, then loans it back to us as “aid’, the more available teh more the colleges up thier prices to get at it…a  vicious cycle. Stop all aid now! prices would plument overnight, and reflect the true market

    • Plumucci

      Some very good points.  We need to keep the big picture:  Government subsidization is thrown in with a system of “whatever the market will bear.”  Within 15 years, the “value” of the object is its original cost, plus the amount of the subsidization!

      A good example of this is healthcare.  A doctor visit when I was a kid was $20.  Insurance subsidies now require us to only pay “copays.”  What’s a copay?  $20.

  • hum_dinger

    To those of you stuck in this quagmire, I am sorry.  I was dumb once too.
     
    I believe that your final year of High School must include a passing grade for a civics and financial literacy exam, mandatory.  No pass, no college.
     
    Second, colleges must be graded by placement.  If there is no demand for bonnett sewing, then dont offer degree’s in it.  Build accountability into the process – hold the school liable to the student’s success.  If student graduates and cant get a job, the school doesnt get paid and the SCHOOL is liable for the debt.
     
    Simple as that.
     
    Finally, just because you have an education doesn’t = American dream.
     
    Go create something instead of putting yourself into indentured servitude.
     
    Read a book, study on your own, and CREATE SOME JOBS – our country will be that much better off when you do.

  • ONUKate

    You wouldn’t buy a car or a house that you couldn’t afford just to “live out your dream.” It is ignorant to get yourself into this position without being able to pay it off.

  • Dlee7283

    The way I look at it they are getting $50 a month until I can actually get a good job so I can pay them back, then they will get more. Most people want to pay them back the full amount as I do, but I am not paying 200-400 a month and basically live on the poverty line as I graduated from college with honors and took the path society said was the best just to be up a creek without a paddle in today’s world. Why do I have to feel like fast food is my only bet after going through 4 years of hard work. Honestly parents its worse than you think, technical path is the way to go now if you want to save yourself 30 grand and have a better option than a bachelor degree. Its just not liberal arts either, my friend also graduated with honors with a biology degree and works selling cell phone cases now.
    Read more: What to do when you cant pay student loanshttp://www.bankrate.com/finance/college-finance/what-to-do-when-you-can-t-pay-student-loan-1.aspx#ixzz27Y92qdb4

  • lindap126

    I understand exactly how this can happen, because it happened to me. I didn’t have the guidance I needed and when my parents tried to speak to me about it, I disregarded their comments because I felt I had the right to attend a private college even though I clearly could not afford it. Now, I have $100k in student loan debt and it’s not easy. I research and research ways to get help, aid, loan forgiveness, but many of the programs do not apply to me or they just forgive federal loans. Federal loans are the least of my problems. I have had to even extend my terms just to be able to afford my monthly payments, which means by the time I finish paying it off it will probably be over double what I graduated with. It’s tough and everyone just says “well you brought it upon yourself.” Yes, I did and I have to pay it back even if it means lots of sacrificing.

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