April 25, 2012

American college students face years of crushing debt

Nationally, the average student loan debt is about $25,000, up 43 percent since 1996.

By Alfred Lubrano / The Philadelphia Inquirer


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Stephanie Martins, a student at Rutgers School of Law, works as an unpaid intern in the Gloucester County Prosecutor’s Office and faces almost $100,000 in debt from college and law school.

Sharon Gekoski-Kimmel/Philadelphia Inquirer/MCT

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PHILADELPHIA — To get educated these days, most students have to go into debt.

And debilitating debt, experts say, could trigger a financial meltdown akin to the mortgage crisis if students don't repay their loans.

It could also make the millennials, aged 18 to 34, the first generation in America not to do better than their parents, a potential failure that has people questioning the morality of how we now pay for education:

"Is it ethical to saddle a 17-year-old who's never had experience with credit with this amount of debt?" asked Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers in Washington. "No counseling teaches the pain of repayment."

And while students suffer, lenders flourish, Nassirian added: "What's better than garnishing my wages and owning a piece of me for life?"

Nationally, the average student debt is about $25,000 per person, according to 2010 figures, the latest reported by the Institute for College Access & Success. That's the highest level of student debt in American history, up nearly 43 percent since 1996, in today's dollars.

Overall, U.S. student debt is more than $1 trillion. This includes loans for students who attended any type of postsecondary institution – whether they graduated or not, according to the newly formed federal Consumer Financial Protection Bureau. That total is more than all the outstanding charges on all the credit cards throughout the United States ($693 billion), or all U.S. auto loans ($730 billion).

Student loans can be dangerous for young people, who can't declare bankruptcy and walk away from their obligations, the way people with credit card or gambling debts can. Student debt can be garnished from wages and Social Security.

"It worries me," said Mike Mychack, 24, of Philadelphia. He graduated this year with $50,000 in debt from Temple University and now works at the Bridesburg Boys & Girls Club in Philadelphia, making less than $20,000 a year. "I'll never be able to pay the loan off at this rate."

Aaron Troisi, 25, knows firsthand the difficulties of debt. He graduated in 2008 from Pennsylvania State University with degrees in sociology and anthropology – and $80,000 of debt.

Eight months after graduation, Troisi got a $42,000-a-year job as a union organizer for Service Employees International Union-Healthcare Pennsylvania. His monthly loan payments totaled $600, but with his parents' help and his own frugal living, he was able to pay $1,311 per month. He was promoted to a $50,000 job, and by the end of 2011, Troisi was able to retire half the loan.

Now, he's getting a master's degree in education at Temple, with an additional $20,000 in loans.

Troisi, who lives in West Philadelphia, considers his original Penn State debt "outrageous." He added, "The loan is absolutely overwhelming. Penn State was founded to help the working class. But they're now pricing people out."

The bulk of students in America attend public colleges and universities, where state funding nationwide has been cut 2.8 percent in the past two years.

At the same time, experts on college financing point out, universities are continually spending money to improve their physical plants and to make their campuses more enticing to students.

Certain schools offer financial-aid packages without loans. But often, experts say, parents are expected to contribute, and they end up taking out loans.

When the family conversation turns to dollars and cents, the living room grows tense.

"Money is just a bunch of numbers to her," Paul Martins, 52, says of his daughter, Stephanie, 25, a student in her final year at Rutgers School of Law in Camden, N.J. For college and graduate school, Stephanie owes about $100,000 in student loans.

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