Once again, the Daily Record printed an excellent article today regarding the student loan crisis and how mounting debts are saddling today’s students. One of the greatest economic catastrophes of our time is brewing in this student loan mess and no one is addressing it directly. Oh sure, there are plans to offer existing and future college students a break either by an Obama tax credit or an increased Pell Grant, but that does nothing for the students who are graduating college, year after year, with high five and six figure debts.
People need to realize that the current economic issues are all linked together. One of the reasons why there are so many houses for sale on the market is because graduating college students simply can’t afford to pay the crazy prices that are being asked. This is a two-headed problem – first, the prices are way out of sync with the value of the homes and second, college students aren’t graduating with a few thousand dollars of student loan debt any more. In today’s world, college students are averaging $20,000 in student loan debt. Some of us have broken six figures in these debts! From the article:
When Melissa Norelli graduates from Fairleigh Dickinson University three years from now, she’ll owe about $129,000 in student loans.
Her private loan officer told her to consider it like a car payment — for a BMW. Norelli, who is studying to be a teacher, said she’ll probably have to walk to work because she’ll have a $900 monthly student loan bill.
“I was naïve to the fact it would be so much money,” said Norelli, 20, of Langhorne, Pa. ” I love my school and my major. But, I didn’t think it was going to be so scary, so overwhelming.”
An annual study on student debt shows that the average debt of college graduates with loans grew by 6 percent in just one year from 2006 to 2007. The average debt rose from $18,976 to $20,098, according to the Project on Student Debt. The report also points out that the debt is rising faster than starting salaries for graduates, which only grew 3 percent in the same time period.
It’s all related. Ms. Norelli graduates with a six-figure debt in a really tough job market which cannot offer her enough compensation for her to buy a home so she spends more time living at her family’s home after graduation, which returns a small financial burden on the family. You have a home that cannot be sold, a college graduate that may not be able to find a high enough paying job, and a family that now has to spend money instead of putting it away for retirement. It’s a vicious cycle and the scary thing is – it’s only one, small cycle in this incredibly crazy market.
I wish all of my best to Ms. Norelli in her future endeavors. As I said in the previous entry, no one should be projecting their personal situations on the brave young people who are profiled in these articles. A few years ago I had the honor of being on the front page of USA Today as a profile in student loan debt. The most annoying thing to come out of that experience was the amazing amount of people who thought that because 50 years ago they could join the military and get a free education, that I should have done the same thing. Or the arrogant jerks who said that I should have worked through college to pay down my debts (I did). These people just LOVED to talk about their success in the wake of another person’s concerns – truly the lowest of the low.
There is only so much of a person’s story that can be told in a USA Today (or in Ms. Norelli’s case – Daily Record) article. And I, for one, wish Ms. Norelli the best and hope that she can find a great job which allows her to pay down her student loan debt quicker than the analysts think is possible. Good luck! 🙂
I edit a website called Gradspot.com, which is a resource for recent grads transitioning to life after college. In many cases, this means encountering the $20,000+ in debt. It certainly compounds the problem to graduate into a tight job market, and it’s therefore all the more important to explore all of your options. Hopefully our student debt “survival guides” and stories like these can help others make the right decisions. Keep up the good work, Joe.
Thanks for the comment, Gritz.
I checked out GradSpot.com – nice work over there! I hope that you’re right and that the combined work of websites like ours help out the current crop of graduating college students.