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Student Debt: What they don't teach you in college

Posted by Alex Pearlman  September 29, 2011 09:21 AM

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99percent1.jpgAlthough college remains one of the most valuable experiences of a young adult's life, it often results in immense amounts of student debt. Two-thirds of 2011 graduates from four-year programs accumulated an average of $34,000 in debt, according to FinAid.org -- more than triple the amount of a 1992 graduate. These modern graduates, already worried about an uncertain job future and stuck in a terrible economy, have little to no idea of how to start paying off their loans.

Some are even calling student loans the next financial bubble. Outstanding student loan debts reached $1 trillion as of the start of the new school year. Tuition rates continue to climb, yet enrollment remains high because young people know they have to get at least an undergraduate degree to have a chance at getting hired.

Alecia Mahoney, 22, graduated from Suffolk University in May with a degree in public relations and a whopping $78,000 in debt. "Starting in February [2012], I will be paying $700 a month in student loans," she said. "I guess I consider myself lucky because I was able to get a grace period after graduation."

Suffolk’s current tuition is $29,776 per year, making it one of the less expensive private universities in Boston. Mahoney, who said the reality of student loan debt has haunted her over the years, now sometimes wonders if it was worth the money. “Unfortunately, I’ve had no luck at finding a full-time, salary-paying job, so I’ve been cocktail waitressing," she said. Although her goal is to pursue a career in public relations or marketing, she knows that holding a second, part-time job waiting tables will always be a necessity.

debt1.jpgWhile college gives students the opportunity to learn about topics unassociated with their major -- one of the great benefits to making your own schedule -- there is one class that most colleges don’t offer that would, perhaps, be one of the most valuable: How to pay off your student debt.

“I feel it has been extremely complicated to receive information on my student loans. I’m given numbers after numbers to call, but I’m always sent to an automatic voice machine and never get my questions answered,” Mahoney said. “I have yet to receive any additional information on my student loans since October 2010.”

Education loans come in three categories: student loans (Stafford or Perkins), parent loans (PLUS loans), and private student loans (alternative). Interest rates vary, but they increase as the minimum monthly payment drops. Consolidating your loans is also an option for those students struggling to pay, but there are restrictions and time limits, and the option isn't available to everyone. Mahoney said consolidation has not yet come up as an option, but she also said she’s unsure how to go about the process.

If $78,000 in student loans doesn't sound that bad, know that it can always be worse. Tyler Brantingham, a 24-year-old Business Systems Analyst at Fidelity, graduated from Boston University in 2009 with a little over $100,000 in debt, even after receiving a half-tuition scholarship.

“My standard payment is around $1,100 per month, but I have reduced them to about $750 a month for two years. Once the two-year period is up, they will go back to $1,100 per month," he said. "The federal loans have a 10-year duration, and the private loans have a 20-year duration.”

99percent2.jpgBrantingham, who said he barely makes enough at his job to make the payments and pay other bills, said that it's hard to consolidate because his parents took out loans in their names, in addition to the numerous ones he took out in his name.

“Whenever the loan payments are due, I wonder what it would have been like if I went to a state school. I certainly wouldn’t have built up the amount of debt that I have now, but I believe finding a good-paying job in my field would have been very difficult,” Brantingham said. “The job market for undergraduates in finance is so competitive that going to a low- to mid-tier school gives you very low chances of finding the job you want.”

Brantingham said that taking out all the loans was worth it because he was able to find a good job after graduation, though he does regret the type of student loans he took out. “If I were to do it all over again, I would have only taken out Federal Direct Loans and made them all in my name. Then I could have consolidated them all and either extended the duration or reduced the interest rate,” he said.

On the other hand, Mahoney said she might have done things a bit differently. “I’ve always believed a college education is worth being in debt...to a certain extent. In my case, I wish I had explored more college options before choosing the most expensive university on my list of schools,” she said. “I question whether or not my experience at Suffolk is worth the debt I will be in for the next 20-plus years,” although she said she doesn’t regret going to Suffolk in general.

debt2.jpgThese two graduates are just a sliver of the far too many Millennials burdened with student debt. Whether or not they find a job, regret their university choice, or are able to keep their head above water, there’s no question that the amount of student loans is enough to cripple any young adult in this current economic state. “We Are the 99%” is the movement currently sweeping Millennial livelihood, most of whom who are trying to draw attention to the immense amount of student debt with which they are struggling to live.

“The biggest advice I could ever give students who are planning on enrolling into college is, be very smart about which school you decide to go to. Don’t pick a school because of the dorms or the school colors. You have to truly consider the money aspect of it,” Mahoney said.

But it can be hard to think about the money aspect of college at the young age of 18. Fresh out of high school, young students are mostly eager to leave home and experience everything college has to offer. However, with the currently terrible economy, and tuition rates rising every year, high school graduates may need to reconsider their wants versus the reality of the cost when it comes to choosing the right university.

“You really need to predict how much loan debt you are going to have and what your monthly payment will be,” Brantingham said.

If you haven’t already begun college, be cautious and check out a few of these schools with the best financial aid (Harvard is on there!). If you're already enrolled or a recent graduate, tell us: Does your student loan debt scare you, or do you feel prepared and knowledgeable about the system? 

Photos by the University of Portsmouth Wall of Debt (Flickr) and We Are The 99 Percent (Tumblr)

By Lexis Galloway -- A recent Suffolk University graduate and current Cambridge resident, I'm an aspiring journalist/novel writer, and I can't live without coffee and my Macbook. Oh, and I'm also TNGG's Current Events editor and writer for TNGG Boston. @lexgalloway

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This blog is not written or edited by Boston.com or the Boston Globe.
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