Student Loan Debt Affects Choices After Graduation

Jessica has racked up $60,000 in student loans. She’s got the power suit suitable for the corner office, but for now her job is to take telephone messages for others.

Still, her apartment looks nice--thanks to bargains she found at Ikea--and she can invite friends over for macaroni and cheese,

“I’ve got 60 grand in deferred loans,” the twentysomething actress playing Jessica tells the camera in an advertisement airing nationwide for the home furnishings chain. “I’m not about to defer my life.”

You know your problems have made it onto the nation’s radar screen when they become fodder for advertising copy. And the rising level of student debt has become a very big blip.

College students have accumulated so much in loans to finance their educations that their decisions about the types of jobs to pursue are being affected, Gen X-perts say. And the debt burden has spilled into virtually every area of their lives: where to live, what to drive, when to marry, even when or if they’ll start a family.

Is this more of that famed Generation X angst run amok?

Students get really angry “when people try to play down their anxiety,” said Ty Wenger, editor of Link, a New York-based quarterly magazine for college students that exists both on paper and on the World Wide Web (https://www.linkmag.com). Link ran a story about student debt late last year and asked readers to post their thoughts about student loans on the magazine’s Web site.

“The response that we received from our readers was more heartfelt, more desperate and more sincere than the response for any article we have run,” Wenger said. “It showed college students are outraged at the effect that student loan debt has on their futures, and the effect is monumental.”

The bulk of one message to Link’s forum, from a student at Oberlin College in Ohio was: “AAAAAAAAAAA!!!!!!!!!!”

The average debt level for undergraduates at public universities was nearly $7,600 in 1993 and for private institutions was nearly $10,500, according to a study released last fall by the Education Resources Institute, a Boston-based education consulting firm and loan guarantor, and the Institute for Higher Education Policy, a Washington-based nonprofit organization.

Borrowing to finance education has skyrocketed in recent years because of rising college costs and changes in federal student loan programs that make it easier to get a loan and to borrow larger amounts.

A whopping 68% of those polled said they consider student loans “necessary yet they are a major financial hardship on my household,” and 52% said that any additional debt or expense would pose a serious financial risk to their households. A total of 62% said they anticipate having to forgo major purchases because of the costs of college loans.

“The overall findings suggest that while borrowing for college has exploded in the past five years, families are torn between their need to borrow and the burdens that these loans place on their present and future,” noted the study, titled “College Debt and the American Family.”

Wenger figures graduates are coughing up anywhere from $200 to $800 a month in loan payments, a burden they might not have understood when they signed all those loan disclosure statements. (The New England Education Loan Marketing Co., a large nonprofit student lender known as Nellie Mae, has various repayment plans, most with monthly payments between $100 and $200 for $15,000 in loans at 8%.)

“They have no idea what it’s going to mean in the long run for their lives,” Wenger said. The first loan payments hit just as recent graduates are trying to put together the pieces of their future, he said.

“You can forget about buying a house. You can forget about taking a low-paying job at a not-for-profit,” Wenger said. “It plays into when you can get married even.”

Not everyone agrees. Patrick Scheetz, who evaluates the job market for newly minted graduates every year for Michigan State University, said he doubts student debt has much effect on graduates’ job choices.

That’s because the job market is so tight (though it’s a little better this year than last) that graduates have very little choice at all, he said.

Southern California native Susan Lowry said that she and her husband, Bob Lundergran, have education loans of about $75,000 between them, “which isn’t bad.” Lowry, in her mid-30s, and Lundergran, in his mid-40s, are working toward their doctorates in American Literature and American Studies at the University of Wisconsin and supporting themselves as teaching assistants.

Lowry recounted a visit to her mother’s bank manager to discuss buying a house and how they ran into the problem of collateral.

“The only thing we’ve ever sunk any money into at all is our brains, and we can’t use them as collateral,” she said.