Continuing Education: Graduating into Debt

Heavy debt loads aren’t just for medical students anymore.

Just talk to Nona Ethington, a political science major at Miami University in Ohio, who will graduate this spring. She’s worried about her student loan debt–which totals more than $30,000.

“It’s this huge looming dark cloud,” she says.

Her burdensome debt is limiting her options, career-wise.

“I have to do something that will allow me to earn enough money to start making $122 minimum monthly payments, and at the same time find a place to live and buy a car,” she says. “I would really like to take time off from school and try to get some work experience, but that’s a lot less feasible.”

Ethington is not alone. In fact, two-thirds of graduating seniors at four-year universities now carry student loan debt, according to the Project on Student Debt’s June 2006 report. Compare that to 1993, when fewer than half of seniors took out loans.

And, with tuitions soaring well above inflation, average debt has increased by more than 50 percent, leaving a typical college graduate with $23,600 in student loan debt and $2,000 in credit card debt, according to a September 2006 report by the Campaign for America’s Future. In 1990, average debt was only $9,798 (in 2004 dollars).

Add to that last summer’s student loan interest rate hike, which fixed Stafford loans at 6.8 percent and PLUS loans (for parents) at 8.5 percent–nearly a 2 percent jump, which potentially means thousands more in interest costs over the life of the loans. Additionally, Congress cut $12 billion from the student loan program in 2005, which many felt could have been used to keep interest rates low. It was money that, in the opinion of Rep. George Miller (D-California), was “stolen from students.”

The figures leave many to believe that financial aid has been raided, and many prospective college students–especially those from middle-income families who don’t qualify for need-based scholarships–are questioning the feasibility of pursuing a degree. In fact, 2.4 million qualified students will not be heading off to college this year because of the high cost of education, reported Sen. Edward Kennedy (D-Massachusetts) during a recent news teleconference.

Yet no one denies the value of a college education. In fact, latest U.S. Census reports show that a bachelor’s degree is said to be worth $1 million over the course of a lifetime. And each year, the average college graduate earns 62 percent more than his high-school graduate peers, according to U.S. Labor Dept. statistics.

“We have a bizarre situation where workers have been told ‘we can’t do much about your job, but make sure your kid gets a college education and they’ll have a ticket to a better life,’” said Rep. Miller. “But at the same time, we’re placing college out of their reach.”

It’s a classic Catch-22 that Miller and other representatives, student activists, and nonprofit organizations are hoping to eliminate by petitioning for better funding for higher education.

Legislation & lobbying

All roads lead to Washington, D.C.–at least when it comes to keeping college affordable and accessible. “We cannot as a nation continue to see talented, qualified students being priced out of the opportunity to attend college,” says Miller. “They are foreclosed from educational opportunities just because they don’t see themselves being able to manage the debt.”

In April 2006, Miller, along with Sen. Dick Durbin (D-Illinois), introduced the Reverse the Raid on Student Aid Act, which would slash interest rates in half on college loans, saving the typical student borrower an average of $5,600. But with John Boehner (R-Ohio) serving as House Majority Leader, Miller’s bill wasn’t taken seriously in Congress, says Ben Smilowitz, one of thousands of students who would benefit from Miller’s bill.

“That’s why we’re outraged. A bill that would actually help students and make education more accessible isn’t going anywhere,” Smilowitz complained. “Congress is completely out of touch.”

On May 3, 2006, Smilowitz donned his black graduation cap and gown and, along with roughly 25 parents and students, marched through the halls of Congress to storm Boehner’s office. The group, which was organized by the Campaign for America’s Future, then presented a petition with more than 15,000 signatures, encouraging Boehner to endorse the Reverse the Raid on Student Aid Act of 2006.

While the stunt wasn’t a flat-out success, it garnered attention for the cause and helped create a national outcry.

When Boehner’s office was contacted, Kimberly Ketchel, Boehner’s spokeswoman, issued this reply: “Rather than staging political stunts, House Republicans have moved quickly and decisively on real reforms that have made a difference for millions of low- and middle-income students.”

The 25-year-old Smilowitz just took out $18,500 in federal loans to attend University of Connecticut School of Law. He plans on going into public interest law and “working to make sure that people have opportunities to make the most out of their lives.” He hopes that by next July, Congress will cut interest rates and he’ll be able to consolidate his loans at a rate significantly lower than the current 6.8 percent.

At college campuses nationwide, student groups are using voter registration and ongoing concerts to get the word out and educate students.

“We need to expand grant aid. We need to make loans more manageable. And we need Congress to make higher education a priority,” said Jennifer Pae, president of the United States Student Association (USSA), the country’s largest and most vocal student organization.

Petitioning the Department of Education

Congress legislates, but it’s the Department of Education that is empowered with the discretion to decide the nitty-gritty details of the student loan repayment process.

That’s why advocates such as Edie Irons are petitioning the department to make student loan repayment more fair and manageable.

“The Department of Education is not accustomed to being lobbied,” said Irons, a program associate at the Institute for College Access and Success, which started the Project on Student Debt a little less than a year ago to ensure more affordable college education. “It’s the more practical solution, especially in this political season.”