Debt weighs down students

Money managing on a college budget causes students to re-evaluate spending

Roberta Hall is a short brunette with cropped hair and an easy smile.

During the day she can be found laboring at the screen of her Mac on a video or graphic design project for one of her classes. If it is late enough, she may have already gone to work at her second job sweeping the UPS store, or maybe she has made it back to her cheap, off-campus apartment where she lives during the semester to save money.

In the summer Hall works three jobs, but during the semester, while taking 21 credits, she only has time for two.

Hall loses a lot of sleep, but she refuses to take out loans.

“I cannot get in debt,” she said. “I cannot afford debt.”

Hall, a junior at Liberty, considers all of her sacrifices worth avoiding the weight of paying back loans in the future.

“I’d spend the rest of my life paying it back,” Hall said. “I know people in their 30s that are still paying back loans.”

Hall is in a small minority.

According to the Minnesota Office of Higher Education, at private four-year universities like Liberty, 75 percent of students borrow an average of $28,600.

The nation’s financial state only worsens the student loan issue.

The recession has taken a toll on all aspects of the economy, but the eye of the storm seems centered on education.

According to the U.S. Bureau of Labor Statistics, in October 2009, 70.1 percent of high school graduates were enrolled in a higher education facility. Unfortunately for these students, the cost of college continues to climb.

According to College Board, over the last decade, tuition has risen 5.6 percent each year above the rate of general inflation.

Despite the overwhelming costs, students continue enrolling in universities because of the employment opportunities they provide.

“In the not too distant future it will definitely be worth it,” Derek Tober, an exercise science major at Liberty University, said of the high tuition costs he dishes out each semester. He has taken out more than $60,000 in loans so far and still plans to attend graduate school.

When asked how much money he will have accumulated in school debt by the time he is done with his education, he said:

“I haven’t counted that, it’s too much.”

It turns out Tober may be right, considering a recent College Board study that showed people with a bachelor’s degree earn more than 60 percent more than their peers without college degrees.

The problem is that in today’s economy, getting a degree-worthy job that will maintain loan payments and a decent standard of living is no guarantee.

According to the New York Times, only 24 percent of college graduates who applied for jobs have one waiting for them after graduation.

Kayla Pace, a junior at Liberty, is not even sure how much money she has taken out in student loans. Her answers to most of the financial questions tossed her way are, “I guess” and “I’m not sure.”

There was, however, one thing she was sure about. “I’m definitely going to need to get a job right after college and try to pay (the loans),” Pace said.

Some students like Pace are oblivious to their financial standing. According to credit.com, 7.2 percent of students drop out of college because of financial pressures.

Combined with the number of people who fail out or drop out for other reasons, this is part of a growing number of students who borrow thousands in loans to no avail or future advantage.

When asked what amount of loans is economically viable for students to take out as an investment for education, Liberty University economics professor Robert Rencher said it depends on how marketable the student’s major is and how much he or she can make in their vocation.

Rencher knew a married couple from his church who graduated from optometry school with a combined debt of $160,000 in student loans, requiring a monthly payment of $2,500.

“They had to put off buying a house and having children,” Rencher said.

Because both were practicing optometrists, their large incomes allowed them to pay off their debt in less than 10 years.

Liberty senior Sarah Rhodes has taken out some loans for school, but is doing her best to keep them to a minimum.
She projects she will be paying them back for about six to 10 years.

“It will definitely impact my future and put a big dent in spending in other areas,” Rhodes said.

Rhodes is an elementary and middle school education major. She hopes to get a job teaching immediately after graduation and possibly join the Army Reserves to make loan payments.

Rhodes, who is currently working at the bookstore and as a Resident Assistant while trying to budget her money to start saving for her future, admits she struggles to manage her money well.

“It’s been hard because of all the expenses for school. It’s hard to make a lot of money and pay for school,” Rhodes said. “I feel like I’m in the same boat as everyone else.”

Rhodes believes the problem with her peers’ poor financial state is a lack of education in monetary matters.

“I feel like a lot of students have no clue what type of loan they are taking out,” Rhodes said. “I don’t think we all understand the system of loans. It would be better to be educated on it.”

Rencher would agree that young students do not realize the financial difficulties for which they are signing up.
“The old school in me says any amount of loans is too much,” Rencher said.

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