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Student Loan - a Life Sentence

yiplong

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Student Loan - a Life Sentence
« on: May 02, 2006, 08:30:44 AM »
Student Loan - a Life Sentence

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."

orky13

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Re: Student Loan - a Life Sentence
« Reply #1 on: May 02, 2006, 08:50:14 AM »
stellar article! Depressing :)

Che

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Re: Student Loan - a Life Sentence
« Reply #2 on: May 02, 2006, 08:58:47 AM »
I think this article glooses over the fact that debt at graduation is preferable to menial job and low pay as a high school graduate.  And they seem to rely exclusively on recent graduates.  I think a better picture would be in they showed how graduates opinion on the choice to go into debt 10+ years out of college.

Re: Student Loan - a Life Sentence
« Reply #3 on: May 02, 2006, 09:21:55 AM »
Yiplong i get this feeling we are the only two people on these boards constantly freaking out about debt :) the ball in my stomach just tightened... :(

However, the article does focus primarly on bachelor level degrees and/or graduate degrees where the average income post employment is pretty low--even a grad with a masters in journalism should expect to make only 40-45k straight out; more I guess is possible with the right connections and experience but the AVERAGE is about that.

Bachelors degrees are different--we all know that minus the engineers a bachelors degree just doesnt' cut it for most of us. Which essentially forces a lot of us into higher education.

still....sick..over..the....d ebt

ugh

Re: Student Loan - a Life Sentence
« Reply #4 on: May 02, 2006, 09:23:10 AM »
I think this article glooses over the fact that debt at graduation is preferable to menial job and low pay as a high school graduate.  And they seem to rely exclusively on recent graduates.  I think a better picture would be in they showed how graduates opinion on the choice to go into debt 10+ years out of college.

I don't think the point of this article was to encourage people to stop at HS. My guess would be that part of its purpose is to point out the ridiculous burden placed on the individual to fund higher education...

Re: Student Loan - a Life Sentence
« Reply #5 on: May 02, 2006, 09:58:49 AM »
it seems we're getting ripped off these days, according to this article, law school tuition has increased astronomically since 1990 while inflation is nowhere near the figures cited.

eventually most people will be faced with huge amounts of debt, anyways.  a home will cost hundreds of thousands of dollars, and not many people can avoid the debt on it.  i think if we can find a way to live modestly, we'll be fine.  life isn't all about money and materialistic things, ya know.

no, it certainly isn't, however, accumulating debt you can't pay back is really frightening. it could destroy your credit for the rest of your life.


yiplong

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Re: Student Loan - a Life Sentence
« Reply #6 on: May 02, 2006, 10:08:36 AM »
And law school isn't like medical school where placement rate (in medical field) is nearly 100%.  Almost everyone who successfully finish his/her medical education can find a job as a doctor.  By contrast, scores of law students, especially those from T3/T4 schools cannot find any decent law job.   ???

Re: Student Loan - a Life Sentence
« Reply #7 on: May 02, 2006, 10:09:06 AM »
I see people strapped in debt at my law firm working a miserable job but can't leave for awhile because of loans.  This really really scares me.  Even with my half scholarship to USC I'm going to have major debt so I'm trying to plan my expenses and future job very carefully.

sacrilegist

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Re: Student Loan - a Life Sentence
« Reply #8 on: May 02, 2006, 10:11:54 AM »
I personally do not relish the idea of my debt making decisions for me.  As a woman who plans to have children someday, I do not want to be faced with the decision of putting off having a child because I can’t afford to take time off or having to choose an overly demanding job simply because it pays the highest (“golden handcuffs”).  One of the reasons I am leaving a stable, decent paying job is that I want more options.  I feel that accruing massive amounts of debt at this time in my life (I'm 27) would effectively leave me with fewer options.

Re: Student Loan - a Life Sentence
« Reply #9 on: May 02, 2006, 10:16:32 AM »
So are you going to go somewhere on a big scholarship?  Not go?  Yes family is so much more important than a golden handcuffs job.  I swear Biglaw kills souls but that's only because I see it everyday and most people on here think that it'll be fine to just do it for a few years but they don't realize what it entails (talking about what it entails is completely different than doing it).  I am very likely going to do government type work.