Janessa Robinson will soon join the "mega loan club" of college graduates with over $50,000 in student debt.
The 24-year-old didn't intend to join those ranks, but her bachelors' degree from Tulane University left her nearly that much in debt, and she plans to start graduate school soon.
The price of education is egregious," she told CNNMoney.
Almost 19% of student loan borrowers owe more than $50,000, according to a report published last week by the Federal Reserve. Only 6% of borrowers had that much in 2001. Student loan debt now outstrips credit card and auto loan debt in America.
Robinson is one of many young college graduates financially stretched to cover both living costs and student loan payments. She pays $275 a month toward her current loans while working an entry-level job at a non-profit in Washington D.C.
Her next step is a graduate degree in public policy. It will mean taking out additional $43,000 -- the same amount as her current annual income. She's considering going on forbearance -- a time period where borrowers don't have to make payments but interest on the loan accumulates -- while she attends graduate school.
Despite the high costs, she still thinks her education is worth it. The statistics support her belief. People with college degrees have higher lifetime earnings, better employment opportunities and significantly lower poverty levels.
"My degree has put me in a position where I can get an entry level job," Robinson said.
Only workers with Bachelor's degrees saw their median incomes rise between 2010 and 2013. Everyone else saw a decline, according to the Federal Reserve. It was especially harsh for those with only some college such as an Associate's degree.
"We're in this odd status quo where we're questioning the value of a college degree, particularly in light of student debt," said Andrew Kelly, director of the Center on Higher Education Reform at the American Enterprise Institute, a right-leaning think tank in Washington.
"Some form of post-secondary education is more important than ever before because other groups are worse off," he added.
Jefferey Jackson is still waiting for his degree to pay off. He earns $24,000 working at the library of his alma mater, Georgia Southern University, after earning his bachelors and his masters.
Jackson, 29, had no financial support from his family, which he says is poor, to pay for college. He took out $88,000 in loans to pay for his two degrees. He cannot afford loan payments on his salary, and his job does not require his degrees.
Despite his troubles, Jackson has no regrets about his education or loans. He's the first person in his family to earn a college degree,
"It's something I'm really proud of myself for doing," said Jackson, who hopes to find a state or federal government job. "I would definitely say the investment is worth it. If the opportunity presents itself, go after your dreams."
While the mega loan club is growing, the majority of student debtors, 64%, hold $25,000 or less in student loans.
Student loan debt is also not a burden only for young graduates. Less than 40% of all student debt owners are under the age of 30, according to a report by the Federal Reserve Bank of Kansas City.
This article is interesting to me because it shows the dilemma that American students are faced with these days. Data shows that getting higher education increases your earning but the cost of education these days is ridiculous. Students take out these loans just to have to work forever to pay them back. But i guess it's all worth it in the end, at least I hope lol.
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ReplyDeleteMany of the students that are in the "mega loan club" end up defaulting on their loans, ultimately increasing government debt. I think it is important for students to consider getting a college education at a school that is within their financial means. Community Colleges are often much cheaper than State and Private Colleges. Students can often save a lot of money just by starting at a community college and transferring out after two years. I don't think it's necessarily right, fair, or equal but I do think students need to look at education like the way they would purchase a house or a car and budget or purchase the education from the place that is best fitting and within their financial means in order to avoid massive debt.
ReplyDeleteThe price of college is getting outragous, as the price of college goes up, the decision to even go to college is questioned. I do agree that when looking at colleges you should seriously consider what you can pay for. If you can't pay for a expensive private college, there is nothing wrong with taking a year at community college to save some money, at this point that might be the smarter choice for most people. I think college decision process is becoming less and less about which campus you like the best, or which school fits your career path best, and becoming more of which college can I afford?
ReplyDeleteObviously, this is a distressing topic for most of us. In my opinion, there are more and more students applying for colleges that cost much more than they will be able to pay off. The mindset of these students is something I've encountered with several other people my age; they are fully prepared to take out loans to cover their entire tuition, and simply believe it'll "work itself out." While this is distressing, it's hard to see an alternative considering the vast difference in salaries between those with college degrees and those without.
ReplyDeleteIt is interesting that the percent of student loan borrowers that owe more than $50,000 has increased so much since 2001. I'm surprised so many students are willing to go that much in debt. Others have commented about alternative college paths, utilizing community college and such but I think it is important to educate high schoolers what it really means to go into debt. They need to understand how long it takes to pay off loans, especially when you are not necessarily guaranteed to have an income after college, before they make the decision to take out student loans. Before choosing a school, my parents and I mapped out exactly how much debt I would accumulate each year and whether or not it would be manageable to pay off within a few years of graduation. But my mother works in the financial industry, and is knowledgable about paying off debt. Not every parent has this knowledge, so it may be necessary that student loan education occur outside of the home.
ReplyDeleteColleges are charging so much for tuition now because the demand for college is so high. Years ago college was much cheaper, but large loans didn't exist for the purpose of attending college, so only those who could afford to pay up front could go. Now that banks loan out large sums of money many people who would not have gone to college before will now attend. This increased demand, and ability for students to take out large loans, has allowed universities to increase their prices.
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