WBUR

The Education Bubble, Part 1: Sky-High Debt Is ‘Overwhelming’ Burden

As college tuition costs keep rising, student loan debt has increased significantly. Two-thirds of students take on loans, with the average debt load now more than $23,000. And as there’s a renewed push for youths to attend some college, there’s also worry that debt levels and default rates will continue to rise as well. Part 1 of a WBUR Series: The Education Bubble.


Endicott College alum Nicole Benson sits by a lake on the school's campus. When she graduated in 2007 her student debt totaled $90,000. (Monica Brady-Myerov/WBUR)

BEVERLY, Mass. — The chapel at Endicott College rings out cheery tunes like “Rainbow Connection” from “The Muppet Movie.” It’s an idyllic campus with sloping green lawns and man-made lakes with fountains. On a bench by a lake, graduate Nicole Benson sits, taking it all in.

“I honestly don’t really remember why I decided to come here,” Benson says. “I think location had a lot to do with it. My mother loved it. It’s a small and quiet campus.”

Benson graduated in 2007 and had major sticker shock: She found out she owed $90,000.

“And it was very, very devastating,” Benson says. “It was very shocking. I mean, just to look at a number like that at 22 years old is very overwhelming.”

She had taken out only $45,000 over the course of her four years of study. One of her eight loans is a federal loan but the rest are from private banks with interest rates as high as 15 percent. The interest on the private loans began accruing as soon as she got them.

Average collegiate student debt has increased to more than $23,000. (Click for full "Facts About Student Debt" PDF from the Project on Student Debt)

Endicott is a small college which, when she attended, cost $31,000 a year. It doesn’t have a large endowment, so most students face a $7,000 gap in their financial aid packages. That means that after federal loans, grants and scholarships, students and families who don’t have the means turn to the private market to pay.

“My mother kind of pushed me to go to school,” Benson says. “I just never had anybody say to me, ‘Wait a minute, this is going to be expensive.’ I honestly just had absolutely no idea.”

Benson’s mother handled most of the federal and private loan paperwork; Nicole just signed. Benson’s parents didn’t go to college and didn’t understand the loan process. Her mother and her grandmother co-signed some of the loans and are also behind on payments.

They were all making the same calculation: It would pay off because she would get a job and be able to afford and pay off the loans.

Endicott told her that with her degree in hospitality management she could make $50,000 a year. And she did get a job after she graduated, but was laid off in 2009 when the economy went south.

“I’ve cried a lot,” Benson says. “It’s been very, very emotional. It’s definitely, it’s taken its toll on a lot of aspects of my life. I’m very stressed out, very overwhelmed and very unsure of what I should do.”

“I worked so hard and I really have nothing to show for it, you know. I live in the cheapest place available to me. I drive a car that is barely running.”

– Nicole Benson

The harassment came in the form of phone calls — sometimes 20 to 30 a day — from her creditors.

“I tried to, I would beg them,” Benson says, “I’d say, ‘Look, I don’t have a job, I don’t know what you want me to do.’ ”

Now Benson has a bookkeeping job that pays by the hour. But her loans have grown to nearly $98,000 and her loan payments are more than $1,000 a month. She says to make a dent in what she owes, Benson figures she would have to pay $3,000 a month.

“It’s (an) unrealistic expectation of the payments that I should be able to make,” Benson says. “I’m like, ‘With what money?’ ” She chokes back tears.

Even though college graduates earn nearly two times more than those who just get a high school diploma, in her case that’s little consolation. She’s thought about bankruptcy, but it wouldn’t help because federal and private student loans cannot be dismissed in bankruptcy. She’s stuck with this debt for decades to come.

“I don’t know if I’ll ever be able to get a mortgage and buy a house,” Benson says. “It’s looking pretty doubtful right now.

“It’s very disappointing that, like, I worked so hard and I really have nothing to show for it, you know. I live in the cheapest place available to me. I drive a car that is barely running. I have absolutely nothing to show for absolutely busting my ass all the time.”

Recently, Benson, working with a pro-bono lawyer, was able to reach an agreement with two of the companies holding her loans to lower her payments. But the other private banks won’t accept a deal. So she’s about to join a growing trend and default on some of her debt. The U.S. Department of Education expects almost 7 percent of students to default on their loans for fiscal year 2007 — the highest rate since 1998.

To the people who say, “It’s all her fault, she should have known what she was getting herself into,” Benson agrees. And she makes it very clear she wants to repay her loans. But she wants others to understand the larger consequences in the hope that the private student loan system will be reformed.

“If such an enormous amount of the young adult population is in so much debt now it definitely will affect the economy for years and years to come,” she said.

A recent poll from Harvard University found that a majority of young adults is concerned about meeting their bills.

Benson doesn’t blame Endicott College for getting her into debt. The school says it tells parents to at least pay the interest on private loans and go on monthly payment plans with the school, which are interest free. But, the school says, the parents choose to stick their heads in the sand. That’s basically what Benson and her family did, and now, she’s paying the consequences.

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  • Zorph

    While this story is sad, I have to wonder how many people did exactly what Benson did while deciding on a college.

    I knew from the outset that I was going to have to pay for myself to go to college and I can tell you that in 2002 at the age of 17, I could tell that Univ of Maryland at $12k a year was a much better bargain than Univ of Boston at $20K a semester. A lot of the foreign students who went to UMD actually spent the 1st 2 years at community college because it was cheaper.

    People really need to start living within their means.

  • Michael Diamant

    As a 2009 graduate, this story hits home because I am currently repaying over $100,000 in student loan debt.

    Has Benson considered taking out a personal loan from a bank or a P2P lender (i.e. Lending Club) to lower her interest payments?

  • http://www.lahey.org Dr. Phil Kousoubris

    IT is absolutely unconscionable for the College system to keep exploiting students this way in this economy in order to propagate their own economic status quo. I graduated college and medical school with only $74k in debt, and it took till 40 as an MD to pay it off. Cut the fat tenured faculty before you cut off the life of a young person. Enough said.

  • paula

    To Zorph: there are millions of students who are in this exact same situation. And contrary to what you believe, financial aid does not spell it out. If a counselor advised students that their $65,000 loan would actually swell to over $150K within a decade, it’s likely not many students would actually go to college. I can tell you, I went to a college in the midwest as it was less expensive than the east coast where I lived. I worked f/t through school. My employment options for the first 10 years after school provided me with a whopping $25K/year salary. Try living on that in a metro area like Seattle where there were jobs for my profession but where my income prohibited even an interest only payment – my base payment right out of school was $750 and that was my payment for the next 30 years. If you qualify for federal hardship, the loan service providers are allowed to accrue interest daily on the principal. So 95% of students end up owing way more than they could ever pay. It’s more crooked than the housing market and those in the know are very aware of what they’re doing. There are NO RIGHTS for students whatsoever either save leaving the country or suicide which sadly, many in this situation do. And here’s the kicker – if you “die” – the loan servicers come after the family. This situation absolutely needs transparency and discussion. Thank you morning edition for including it. You may want to look at studentloanjustice.org if you are not already familiar with it. The Facebook page is loaded with stories similar to your Nicole’s. If anything she is NOT ALONE.

  • Cyndy

    I work in mortgage banking and see these young people trying to buy their first home, despite having large student loan debt. Many of them will try to put the loan payments into deferrment for a year and FHA does allow the banks to ignore the student loan payments for 12 months when calculating how much of a house payment the homebuyer can afford. The loans continue to accrue interest so at the end of deferrment, the new homeowners have both a house payment AND even larger student loan payments. This is not exactly sensible, many of the recent grads will claim they’ll be getting HUGE pay raises before the loan payments kick in… as a mortgage banker, I hope so.

  • lem mills

    This is a very dire situation.

    As a former HS educator, I advise parents and youth to utilize the Community College system as a financial asset, for degree completion.

    Of course, you must ensure that the Community College is accredited and that the 4-year transfer institution will accept the credits.If the aforementioned are in place, the Community College system becomes a financial boon to degree seeking students and their families.

    State colleges, also, become another prime consideration.

    Of more importance are the Macro issues : a dearth of sufficiently salaried employment opportunities in the present economy and the predatory nature of the college loan systems.

  • Rod

    This is to commend Monica and her colleagues at WBUR for such great reporting. Nowhere in the US, excepting Boston (I currently live in Salt Lake City), could there be an impetus for a subject like this, which is being presented with such poignancy and depth. Stories like these are another reason why WBUR, to me, remains a great treasure of realism, common sense, and passion. My very best regards to everyone at ‘BUR, and of course, solicitude to Nicole Benson, and the thousands of students like her, who are facing a lifetime of crippling debt.

  • A Rao

    Main question here is why are undergrad schools so expensive. Is there a reason for colleges to charge between 25k-55k/year for an undergrad education.
    How come one can get an equally good education in Canada or anywhere in Europe for a fraction of his cost.
    May be the focus should be on education and not spending millions of dollars of paying basketball/football coaches salaries, building multi million dollar sports arena’s.
    Are we missing something here.

  • Raymond

    I’m a Financial Aid Administrator and at our Community College students are borrowing large amounts in loans for living expenses. Some of our students would have been better off going straight into the workforce after high school. To me it doesn’t make sense for someone to take on so much debt acquiring a degree that will take the rest of their life to pay off. But our society pushes this. Academically some students just aren’t college material, not even at a Community college. I’ve seen students rack up over $25,000 just taking remedial coursework; coursework that is not college level. And why?…Because society tells them that we should all go to college. No one wants to talk about such a taboo issue. Counselors are too afraid to tell students that college maybe isn’t for them.

  • Dave

    I think we need to look at this from the much bigger picture of our national priorities: we spend an enormous amount of money on the military but by comparison so little on education, the environment, infrastructure and so many other human needs. We do not have unlimited funds: we will destroy this beautiful country and all that it stands for if we don’t straighten this out.

  • G

    I’d recommend a good 7-10 year plan for anyone in a similar situation. I had no $$ coming out of high school and no parents to support me. I ended up on a 9 year program to graduate because I was terrified of accumulating debt. I paid as I went and practically took every other year off to scrimp, save and put myself back in the position to take on another semester. Painful and even embarrasing when my friends were all graduating from great 4 year schools, but it paid off for me. I took a total of $7k in stafford loans and paid them off within 3 years of graduating.
    Nothing wrong with stretching the process out, so long as the student can remain focused on the end goal.

  • David Kimball

    An option that I don’t hear too much is to work for a company (usually a large one) who will pay for a person’s education. That was the only way I could go to college. It means the process is strung out over more years, but it’s better than owing $100,000 with virtually no work experience.

  • Hillary

    When I hear stories like this, I’m often struck by the lack of common sense and basic financial awareness that leads to poor decision-making and a lifetime of debt.

    To “find out” at graduation that you owe $90,000 speaks either to a lack of responsibility either on the part of the student or the college. When I was in college I was aware all along of the amount of debt I was accruing – there were no surprises at graduation. I received this information from my lenders and my university. I was certainly no math whiz, but if I had gotten to a point where I began to be overwhelmed by the bottom line, I probably would have considered transferring to a cheaper school.

    After graduating, I went to grad school for a year to earn a professional degree, thus allowing me to earn a better salary than I could have gotten with just a B.A. in English. (I applied to 10 grad schools and attended the one that gave me a full scholarship because I didn’t want to take out any more loans.) I used the standard 10-year repayment period to pay back my loans and now I’m debt-free. For most of that time I lived with roommates and didn’t own a car. It can be done.

  • Nina Alonso Hathaway

    So what’s a person to do with a daughter about to start college in the fall? Are the current Federal loans any better? What are the options other than community college, etc. Information is needed about how to cope.

  • SJH

    WBUR great job! I am in the Financial Aid Industry and this is NOT a new topic! I have counseled 1000′s of families on funding college. I will tell you…you need to be a smart consumer or you WILL fall prey.
    Even parents with their financial experience have a hard time wrapping their minds around the options, term and hoops. It is not simply comparing % rates and ARP’s- you need to look at terms, conditions, deferment options, etc… Very unfamiliar territory for adults never mind students!
    It is not a mystery to me why most families get this wrong- it is complex and confusing! Students cannot and do not comprehend the debt conversation. This is where the parent needs to step in and protect the innocent. Saying NO is not our strong point as parents.
    The responsibility for the debt should be shared.
    1. The student only had 1 Federal loan. This is a failure of the college and parent.
    2. The debt does not support the intended Major (occupation). This is a failure of the college, parent and student.
    3. A State college could have provided the same education. This is a failure of the parent and student.
    Additionally, Colleges quote the average debt as $23,000 which is grossly misleading. They do this because they can. This average only includes the student’s Federal loans- not Federal PLUS loans or private loan. Some colleges even go as far as stating their student have NO DEBT? How do they say this? They block the student’s access to the Federal Stafford loan @ 6.8% and have mom or dad take the debit in a Federal PLUS loan @ 8.5% or 7.9%. Now they can say their student’s graduate with NO debt…amazing they can get away with this type of marketing? Go luck!

  • http://wbur.org Peter from Newton MA

    Congrats, WBUR. Much needed report!
    Aren’t the private lenders also federally backed for these loans?
    If so, shouldn’t there be an expectation of fair play in return for government guarantees? I suggest this should include 1)Non-usurious rates (which 15% clearly is not, especially when prime is at 3.25%), 2)payment suspension and, hopefully, interest accrual suspension if the recipient person is later un- or underemployed, and 3)full disclosure of the lifetime cost, as is now done with credit cards.
    How about comments from Cong. Frank on this matter? It appears to me that our tax dollars are being used by loan sharks, who are in turn protected by the new, improved, super-lender-friendly bankruptcy laws.

  • http://www.wbur.org Monica Brady-Myerov

    I know this story and others in the series are raising a lot of questions for anxious parents and students. We will try and answer some of them today on Radio Boston at 3pm. I will be on the air with a local expert and we will take calls. We also welcome more questions to our website. Thanks for listening.

  • Accipiter

    What it all boils down to is this: college has become so expensive, that the only ones able to go are 1) those who are able to get ‘full ride’ scholarships due to grades/poverty/disability or 2) the rich. All the rest of us have to get loans, and according to a lot of people, we should just go work at Wal-Mart or McDonalds and stop whining about wanting a chance at a meaningful career.

    But, it’s okay. When the economy completely collapses due to an entire generation putting 90% of their paychecks into their student loan payments, things will change. It’s sad that it will take a crisis to facilitate that change, but we’ve already seen that the government doesn’t seem to want to ‘help’ until it starts damaging the workings of the country.

  • Mike

    The problem is nobody knows what the means are in the future.

    Private Schools hire loan offers that are no better than sales people.

    Private Schools hire recruiters that are closet salespeople.

    Private Schools push advertising that is targetting low income first generation college goers.

    This is no better than the subprime home lending, the problem is, it’s WORSE because there is no aid for these students/former students that are already underwater.

    How do I know this? Sallie Mae has me pinned under $85k in Private and is garnishing me for $35k. The only way I can get out of it is by paying them more.

    Obama’s plans are fantastic but do NOTHING for those of us already defaulted, already bent over by these rich banking companies that suckered us.

    Here’s another tidbit of info…

    Sallie Mae pays schools to become their prefered lender. These kickbacks go to either their closet sales people or to the schools themselves. It was originally designed to have schools lower tuition, but it doesn’t.

    I would declare bankruptcy but apparently students are even lower than even the lowest form of consumer in the eyes of the government right now.

  • Mike

    Society tells us to go to college, they just don’t tell us how to pay for it properly after we’re done.

    FASFA only goes so far, and those documents they slide to you in the schools sound pretty convincing and the same completely when both the private and the federal have Sallie Mae’s name on them.

  • Treeda

    This young woman’s example is an excellent illustration of the unconscionable bubble that exists in higher education. Bright and hardworking, she comes from a family background that cannot possibly understand the nuances of the dysfunctional and byzantine higher education market. Endicott is an undistinguished institution (which admitted over 48% of applicants this year according to US New and World Report making it only marginally selective) with ambitious, expensive growth plans. A $12 M dorm project is about to start, a $17 million performing arts center was just completed and a $16 M science center is under construction. According to the college president, they are seeking university status and have plans for more PhDs (where there is already an oversaturated market.) This kind of growth, which we see in all kinds of schools all over the country, is a costly and irrational strategy pursued by college presidents and their boards who can only pay for this unwarranted self-aggrandizement with a complicit student loan system. Just like the mortgage market was happy to provide subprime loans for people whose incomes could not possibly justify the cost of a home and helped drive the housing bubble, the same thing is going on with colleges and universities where students have both a completely unrealistic view of what their future earning stream is like and how student loan debt resets. Students whose family resources do not allow them to pay for expensive (and often mediocre) private colleges should not be taking on excessive debt to finance degrees in fields that do not lead to lucrative jobs. State schools and especially community colleges, while not as prestigious or aesthetically pleasing, are much more cost-effective. The problem is one of information asymmetry. Schools and banks know what the outcome is likely to be in terms of debt levels and future earning prospects; students from lower and middle class families without the benefit of much counseling do not. Since it is not in the financial interests of either the banks or the schools to provide a picture of the stark reality to students and their families, we need an overhaul of the federal loan system so that hard working families face a level playing field in terms of the kind of information they need to make the right decision and are not consigning their children to a life-time of crushing debt.

  • Mike

    Honestly, if I could afford to have a kid some day…

    …I would tell them NOT to go to college.

    Bankruptcy laws need to change. The banking industry tanked students. They suckered home owners and then they went to their greatest source of income. They knew in 2005 they would have us trapped and Bush let them. No child left behind? I feel pretty left behind.

  • Mike

    Ironically enough, I was originally slated to attend Endicott. Instead I went to 2 art schools and didn’t even finish my degree because I didn’t have a co-signer.

  • Elysia

    This is an excellent story to be pursuing, and I think points to the great need for financial literacy courses in school for both high school and college students.

    I graduated from college in 1997, and believe me, at that point things weren’t a whole lot better. The FAFSA is a nice idea, but trying to determine what I was eligible for in financial aid took a lot of work and a lot of visits to the financial aid office. I finally ended up getting a work study job at the FA office because I was there SO much. My original FA counselor was horrible and didn’t help at all. The scholarship office was completely different and very hard to figure out. I still have student loans, but at least my rate is fixed at 2.875 and they’ll be done in the next four years.

    As a parent of young children now, I cannot imagine how I will help them pay for college, and every financial advisor says to save for retirement because you can’t get loans for that. But I don’t want my children to suffer under the burden poor Nicole is experiencing. We need debt education — what if on the line on her form where she needed to sign, it indicated how much interest would accrue per day from the moment she signed? Credit card companies now must disclose this, how can we treat our student loan system any differently?
    I hope Nicole finds some way to refinance at reasonable rates. Attack this debt! Live at home, take the bus, throw everything you can at it so you can still have your life!
    Best wishes to Nicole.

  • http://none Kevin

    I agree with Treeda on this. Why is it that I, who am a very regular listener to NPR and watcher of PBS, have never, ever heard or seen one critique of higher education costs? Why does higher ed tuition go up 10 percent a year? I checked my school: 14 years ago I got a masters degree; it’s a public university in Michigan. I remember what the tuition was then, $135 a credit hour. Today it’s something like $549. I used a compounding formula and found the increase, based on a once yearly tuition increase, is just over 10 percent. Why? The subject of the article: it’s not her fault. She and her parents just bought their line. They lied to her. There should be a way out. The bastards in the congress are responsible for this.

  • steve

    I was 26 with a masters in computers and 80k in debt. I just finished paying at 39 now i can look a starting my life.it has limited my opportunity in life. I have taught a schools where the teachers fail out kids but the administration keeps letting them stay to keep the numbers up. The degrees are next to worthless and employers know it. The only one who have to behave responsible is the student not the school or the lenders.

  • SJH

    Just to answer a few questions:
    No this is not just common sense…many lenders intended to deceive and confuse. I have met with many intelligent parents that need the information explained in detail before they see the light. Lenders will not spend this time with parents and colleges don’t have the time. So who is left to do the job? Not a State Agency or the Department of Education with inexperienced and/or misinformed employees.
    No- Private Loans are NOT backed by the Federal government. Before the collapse most were backed by an organization called Teri.
    There is current legislation being introduced to dissolve private student loans in bankruptcy. This will only cause private student loan rates to go even higher.
    Yes- at one time Colleges had preferred lender lists that certainly rewarded the employees for this relationship! Dinners out, vacations disguised as “conferences”, shares/stocks (example: Johns Hopkins), tv’s, DVD, ipods and more.
    In 2007 Sallie Mae hosted a junket on July 4th in NYC at Pier 17. Open bar, tons of food, fireworks, and paid transportation service for 2500 people from midtown! They initially invited 4,000 people but the city asked them to scale back on the attendees.
    Since 2007 legislation has prohibited this type of relationship and tightened up on preferred lender lists and gifts must be under $10.

  • George Williams

    My wife and I are not wealthy however we have sent 3 children to college (BU, Catholic University, Maynooth College (it is in Ireland) with two of them doing graduate work and none of them graduated with college loans. We, in conjunction with aid from BU and CU, paid all of their tuition, fees, etc. My wife and I scraped by to do this. I think the kids appreciated it; more importantly, they were able to get a start in their lives withouit crippling debt.

    There is no such thing as a free lunch and we sat down with opur children and explained the drawbacks to incurring heavy debts while going to college. They had the choice and, fortunately, they chose wisely.

  • CHRIS in Atlanta

    I realized that this concept of passing debt to the student was happening back in the 1990s when I was at BU. I noticed that many of the students would come to school and then not have money to continue, have so much debt, and because they can’t continue and have the debt – they are stuck. This was the case for a particular segment of the student population, but now ironcally, i see that it is an issue that is affecting a larger population other than the minority or financialy weak student population.

    The schools knew what they were doing, they have built new dorms, wings, and expanded their footprints on the students loans. The cost of college is not the issue, the issue is the amount of growth the institution is trying to do, and at the expense of the students.

    I didn’t have a large debt, about 26K, which i have paid, but only because i was in a field that tends to pay very well and I didnt take on too much. I was poor enough to get grants. :)

    They should just cap the student borrow capacity at a level that is consistent with what they are learning. A basket weaver major is not going to make 100K out the door. Why give them something they obviously can’t handle.

    This is very much like the credit card companies giving unsecured debt to college students problem. These businesses are taking money from ignorant (adult) babies and their uninformed parents (mine too). So, I say, screw the loan companies ad schools, pay only what you can, never pay a collection company – always pay the original lender no matter how late , just send what you can. Dont live in a shack, don’t go hungry, and don’t lose sleep. This is their risk, and they lost.

    If they call you, tell them to communicate via written letters.

    Go on with your life, but do what you can. Your fortune will change. It is a function of time.

    But get your education, it is worth every penny.

  • Carolyn Donovan

    This story does not move me. It’s like the people who made $15K a year taking out a $400K mortgage; I can’t feel sympathy.

    The recent graduate in this story had no input into her college choice, didn’t know how much debt she was carrying? It’s just a big “wow.”

    My parents couldn’t afford some of the more expensive colleges that I got accepted to in the ’80s. Their utter fear of the amount of debt I would have and the financial burden they would have made them say, oh what’s the word, no. As in “No, you can’t go there, we can’t afford it.”

    My parents didn’t go to college either, but jeeze, at least they knew what was what.

  • Accipiter

    Chris in Atlanta, you said:
    “They should just cap the student borrow capacity at a level that is consistent with what they are learning. A basket weaver major is not going to make 100K out the door. Why give them something they obviously can’t handle.”

    The problem is, the cost of tuition has nothing to do with the projected income from your major. An art major has to pay the same amount of tuition as a physics major. You cannot tell someone they shouldn’t go to school for a career they want just because their student loans are more than their yearly income will be. That reeks of the “only the rich should go to college” kind of mentality that has no place in education.

  • Casey

    I agree with Hillary. It can certainly be done. What I wanted to say is that I do not feel for the graduate in the story. To be able to live in one of the most expensive cities in the country, have a job, and own and maintain (especially given the recent gas prices) a car is more than what many single mothers can afford to do despite working more than one job and raising children. Be grateful, graduate: there are millions of people around the world who would trade their worries in for yours.

  • http://www.futurechefs.net Toni Elka

    My organization, Future Chefs, works with high school culinary students, many the first in their family to go to college. I’m saddened by the comments from WBUR listeners who blame the victims here. None of our students recieve financial literacy classes in high school, all of them are heavily recruited by for-profit schools who have easy entre at the schools and come prepared with glitzy marketing and swag designed to seduce vulnerable, underprepared students. Most of the young people we work with have no plan for life after high school and no idea of how ill-prepared they are for the academic and social challenges of college. The schools use fear tactics to get students to sign before the ‘lose their spot’. It’s really so cynical and tragic and like so much else in our messed up economy, a small number of people are getting very rich from what is a formula for disaster for low income families and individuals. Shame on America for allowing it to continue unchecked.

  • JMJ

    I am amazed by the number of people who are willing to put the blame for student debt squarely on the shoulders of the TEENAGERS-lest we forget who we’re talking about, here-who took it on. While students with significant debt of course bear some responsibility, the people pointing the finger solely at them sound eerily like those who blame the housing collapse on all those ‘irresponsible’ would-be home-owners. I don’t even know where to begin with the many, many factors that this attitude overlooks, so for what it’s worth I’ll link to a blog I wrote recently on my own student loan situation: http://open.salon.com/blog/jeannemarie1/2010/05/12/student_debt_is_not_that_simple_stupid

  • Brian

    Those of you passing judgment (Carolyn I’m looking at you) really need to get over yourselves. I’m sure this young lady is losing sleep because she doesn’t have your sympathy. Give me a break.

    The student loan industry has become a legalized loan sharking industry, and students are at their mercy, with high interest rates. I’d love to know what Ms. Benson’s final bill would be without the interest. Add to that a down economy where no one can get jobs, and it’s just a horrible situation.

    Yes, potential students should be better informed before they get themselves into such a trap. But, the predatory lenders should be corrected for preying on the students as well.

  • WasWideEyedandHopeful

    I too am close to being in the same boat as this girl. I was told by my Financial Aid officer that I’d be making enough money to pay my loans (and how did the other 500 people a month that graduated from this trade school pay their loans??) So it just seemed to make sense. Funny enough, when I applied for loans, nobody could seem to tell me what my monthly payment would be.
    I worked p/t through college, and went right into the work force afterwards. I’ve worked since I was 15. I don’t spend money, I’m a penny pincher. I currently hold two jobs. I’m also doing what I went to school for, and can’t afford the $550/mo cost along with living expenses. The ONLY, I REPEAT, ONLY option I was given by Sallie Mae was to pay interest only for 2 years.
    I’m trying to do the right thing and keep up with my payments but after this 2 years is up..I don’t know what I’ll do…
    According to Federal Loan Income Based Repayment Chart, our government deems $104/mo in payments to be humane for my income bracket.
    And the weirdest thing…even when I was pay the interest and principle for the past 2 years…my balance due seemed to rise…
    Forget children. Forget a home. My life probably won’t start until I’m 49. I’m so depressed and scared all the time. I’m going to need a freaking Christmas miracle.

  • Andrew

    She doesn’t blame the school? I would absolutely blame the school. They sold her a defective product-now her life is screwed up, just as much as if she were disabled because the car she bought crashed and injured her.

    She’s has consigned herself to become a money making instrument by signing the loan papers. until student loans have some definite time horizon on how long the lenders can collect, what you have is an indenture instrument. slavery, essentially, for the rest of her natural life.

  • Brandon

    I think the majority of the blame has to go to the individual and her parents for not understanding what they were getting into. In order for $45K to become nearly $100K means no interest payments were made and the it was allowed to capitalize. At such a young age, the difference between $45K and $100K is a huge deal and letting the loan get out of control like that puts her in a huge whole.

    Having said that, I like many others blindly took on substantial student loans to fund my education. Luckily, I studied engineering and had a good paying job to pay off $45K within a few years of graduating. People do this because they don’t know any better and assume well everyone else is doing it so it must be alright. I think the high schools that are preparing kids for college should spend a lot MORE time preparing students to understand the financial impact student loan debt can have and have give the student realistic expecations. Taking on $100K in loans to go to a private college to become a social worker who will likely struggle for years to just make the minimum payments is very risky yet people do it all the time and the guidence counselors who adivse these students don’t seem to be getting this message across.

  • Carolyn Donovan

    Brian – If you re-read my post, you will see that I am calling out the parents, not the graduate. Parents need to know about the money thing until the kid turns into an adult and have to face the money thing themselves.

    All I’m saying is that my PARENTS, not ME, knew our family’s financial situation and took that into account when I went to college (because they were paying part of that expense as well). I was a doofus kid, they were the aware parents.

  • Brian

    Carolyn, my sincerest apologies. I’ve read so much on this and misread your post as being like others who like to attack the students. Again, please accept my apologies.

  • Jaime

    Brandon, I got lucky too, studying engineering and not accruing too much debt even though I did not pay particular attention when signing the papers. My brothers and I are first generation college graduates, and my parents didn’t understand and were never personally liable as they did not qualify for PLUS loans. I blame multiple parties in this impending fiasco: lenders, lendees, parents, colleges AND high schools.

    Additional thoughts: (1) Colleges are for-profit business – they have bottom lines and boards of directors, it does not benefit them to financially “overeducate” students; (2) High schools – financial literacy is a MUST in this “new” economy, public institutions are not dependent on student loans for their survival and therefore are an appropriate venue for this topic; (3) Parents – they are not financially literate on this topic, they are struggling with their own debts and projecting their retirement needs; (4) Lenders – they are overestimating students’ ability to repay, private loans are not held to the same level of accountability as federal loans; (5) Lendees – you have to take the time to read the paperwork, project your income and understand the financial burden.

    Liability for this issue should be considered strict, joint and several. (http://www.businessdictionary.com/definition/strict-joint-and-several-liability.html)

  • Julian

    I wish reporters covering this topic would note that the “average” student debt figure constantly touted by gov’t officials is silly because it includes a huge portion of Quebec students who pay the lowest fees (BY FAR) in the country. Because so many students attend classes in Quebec (as a percentage of the total population) the numbers are much lower on average. I bet the real figure is more like 30K if Quebec were removed from the calculation.

  • Jack

    A lot of people glaze over the fact that college from day one of kindergarten is hammered into our heads as the next step. Look around and tell me how many jobs you find with upward mobility that only require a high school education.

    What students do, myself included is understand that loans are a necessity, sure they’re big and take sacrifice, but what choice do you really have? You have to take the risk in order to succeed in job market, flat out. Any specialized job market demands education or three years experience, it’s a fact that has to be taken into account. Do we the collective generation want to spend the rest of our non-retiring lives busing tables and answering phones or do we put our finances in question to move into the job market that allows you to start saving for a house, kids and the like? There’s your choice out of high school, it’s no wonder we’re so easy to exploit, because it’s our lives at stake.

    “People should live in their means” is just the armchair general opinion. What you are ignoring is these students graduate to empty job markets. They’re not in debts over their heads until the markets they were trained to participate in fail them. Then they’re forced to take the lowest tier of high school dropout jobs with a $15-50k burden attached. That’s how you become insolvent, it’s not even comparable to mortgage loans because we are taking these loans knowing they’re an investment for a better job and a better life. If you graduate and pick up a nice job in your field for $35-45k a year, the loans are merely an irritation. But that’s not happening with this economy and you’re seeing more Bachelor’s of Science and Arts bagging your groceries for $8 and hour (tops).

    The only blame can go to the society that not only promotes but requires college in order to participate meaningfully within it.

  • Eric

    I was dating Nic while she was going to Endicott. I had graduated UMaine with an Engineering degree but was working in a machine shop at the time making like $12/hour with no benefits and living with my sister. My student loans are about $30K. I eventually moved on to work in a great company with great pay and benefits but I consider myself one of the lucky ones. My student loan payment is cheaper than most cable bills! But the truth is there are no jobs nowadays even for engineers getting out of college. Look at it this way, lawyers, doctors, business majors can rack up way more debt than this but its within their means because they can pay them off out of school because everyone needs lawyers and doctors and they typically make a chitload of money (though not so sure how well doctors are going to do with this new healthcare debacle once that takes over).

    I think a lot of it has to do with government policies. Jobs are going over seas, we are selling ourselves out, Americas standard of living is being brought down to the rest of the world rather than bringing the rest of the world up to us. There is a much bigger picture going on here as far as jobs and job placement in our economy overall. There is no more middle class. You either have it or you don’t. The American dream-shattered.

    Nic is a very hard worker and very smart and quite frankly I think she is a victim of our diminishing economy brought about by our elected officials who ultimately don’t feel the economic pinch and are exempt from the very policies they enact. My point being the government can do things to ensure that our best interests are brought forth rather than those of the elite. Policies like fair trade, not FREE trade for one. Get rid of NAFTA and the like. Also, The incentives for big business to outsource is overwhelming.

    It’s tough to hear someone I care about have to deal with this. But I know Nic, She is a very hard worker and very smart. There’s plenty of blame to go around here but she has to think outside the box, use her skills and get on a track to success. Everything will be ok.

  • Jonque

    Amen. I was in a graduate school occupational therapy program and paying with student loans – the only financial aid that was afforded to me. After my second semester (with a 3.9 GPA) I was told by my college financial aid department that my loans were being cut in half. I would be able to pay for my tuition only if I agreed to sign up for private loans. Well, having no assets this was not an option for me so I had to drop out. They were actually shocked – they said I would be leaving school to be jobless (and they were right). If this is the option that students face, is it so surprising that they feel forced to sign up with the loan sharks? By the way, this happened at Mercy College in Dobbs Ferry, NY.

  • Jonque

    And there are a millions that would not – they look at the debt of U.S. schools and shake their heads.

  • Jonque

    When you went to college the laws regarding student loans were different. Interest capitalizes in different ways for private loans and consolidations can easily double the cost. Additionally, interest rates can be changed, especially for private loans which can easily range up to 18% and more, just like the variable rate mortgages that caused the housing blow up. Additionally, lenders tend to sell student loans without informing the student – even though they are legally required to. The purchaser of that debt can then hike the interest up. In the ten years that I have held my student loans they have been sold probably 15 or 20 times – I have been notified twice. Because something has not happened to you does not mean that one must be an idiot for it to happen to them

  • Jonque

    The reason you don’t hear so much about it is that it rarely happens anymore. Tuition reimbursement occurs at only top tier companies and for most it is capped at $3ooo per year and must relate directly to the job you presently hold. That wouldn’t buy a single course in NYC – and even if it did, how would you attend your courses? Most are held during the day and companies that allow time off for that sort of thing are one in a million.

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