College Debt

Most of us have it--student loan debt.  Further, many of our students are looking a future filled with every increasing amounts of student loan debt.

In today's Washington Post, there was an op-ed by a woman who was a second-generation Latina college student.  She states that she and her family were not fully aware of the documents that they were signing:

"Looking back, it’s easy to say that my parents failed. They should have asked more questions and sought counsel. More important, they should never have co-signed the loans or allowed their financial information in our aid applications because they had no intention, nor means, of paying for our pricey educations." (source: www.washingtonpost.com)

Further, her whole life she had been told by her parents that she could go to college wherever she wanted to and that somehow, perhaps with scholarships and grants, it would all be taken care of.  

If only it really worked that way.

If you are like me, you have dealt with similar scenarios with your students and families as they have gone through the post-secondary planning process.  Parents only want the best for their children, and they want them to have everything they have ever wanted and worked for.  Further, if they have seen their child endeavor their entire academic lives to get good grades with the goal of being able to attend the school of their dreams, they feel their child should be able to do just that, whatever the financial cost.  But is this realistic in today's world?

The answer to this question lies in a few reports that have recently come out.  Student loan debt now surpasses auto debt and credit card date in the United States.  Yes, that's correct--we owe more, as a nation, on our educations than we do on our credit cards.  And we invented owing money on credit cards.  Additionally, College, Inc. reports:

• One-third of the national student-loan balance is held by people ages 30 to 39, and another third by people older than that, signifying that only a small share of college graduates manage to retire their loan debt while still in their 20s.
• Student loan debt is rising at a time when other debt is flat or even declining. From the second to the third quarter of 2011, the nation’s loan balance grew 2.1 percent, from $852 billion to $870 billion. 
• Fifteen percent of all Americans with enough of an economic pulse to have credit reports have outstanding student-loan debt. Two-fifths of people under 30 have loan debt, and 25 percent of those between 30 and 39. 
• $85 billion in student loan debt is “past due,” and of that total, three-quarters is owed by people over 30. More than five million borrowers have past-due student loans. (source: www.washingtonpost.com)

All of this student loan debt has a profound effect not only on the economy, but also on society.  According to a US News and World Report article, this debt is preventing the Y and Millennial generations from moving out of their parents' homes and from buying homes of their own.  Many are putting off marriage and children because they believe they simply cannot afford the expense at this time.

Thus, I do not believe that you can have an honest conversation about college with students and families if you do not discuss the current financial situation of the family, the costs of various schools, and the realistic salary and job prospects of certain college majors after graduation.  This is hard for many school counselors to do--we are a kind and optimistic group of people who also like to believe that our students that have worked diligently for four years can go to any school they would like.  The reality is that they may get into their top school of choice, but that paying for it may come at a high-cost with financial and life ramifications for decades beyond college.  How can we as school counselors best assist our students and families?:

• Talk about the money.  When we start talking to our students about making their list of college parameters that include size, location, programs, etc., we also include financial situation.  I specifically ask my students and families to make sure that they are having very honest and open conversations about what they can realistically afford to chip in, as well as what would be considered a manageable amount of student loan debt beyond graduation.  Experts typically recommend that the total amount of student loan debt you carry not exceed your expected annual salary your first year out of school.  Thus, this would be less money for someone going into education versus someone going into engineering.
• Encourage a broad list of schools with open minds.  So often our students and families come in with the mindset of looking at one school as their top choice and then a few other schools "just in case."  However, sometimes there has been very little research done on these "safety" schools, to the point that sometimes the applications are not even sent.  We need to encourage lists that encompass many different schools and price points, as well as promoting the idea of being open to and taking a hard look at all of the schools, and, more importantly, the financial aid offers from these schools.  We tend to talk about "reach," "probable," and "safety" schools with regards to academic criteria and standardized test scores, but we should also have a second list with the same categories with regards to cost.  I consistently tell my students and families that the best school for them may not be the best school that they can get into.  Some of these attitudes and beliefs may be changing, as in 2011 only 54% of surveyed college freshmen reported that they attended their first choice school, citing money and financial aid as reasons for choosing one of their alternates. 
• Point them in the direction of resources early.  There are many resources out there to help students and families navigate this process so that they are better equipped to make informed choices about where to go to college and how to pay for it.  There are webinars on Planning Before You Go sponsored by Equal Justice Works.  There is any number of checklists for parents and students with regards to financial aid, such as this one at the New York Times The Choice Blog.  There is the FAFSA Forecaster which can help families to get an idea of what they might be able to expect with regards to federal aid.  It is only an estimate--an exact idea can not be given until families fill out the FAFSA in the spring of their senior year.   The Occupational Outlook Handbook can help to give students and families an idea of mean salaries for careers, which can be helpful in determining what might be a reasonable amount of loan debt.  For an idea of starting salaries, you can find a very basic list here.  Also, stay tuned for the College Scorecard that the government is beginning to pull together--it will show information on employment rates, graduation rates, and student loan debt for every college and university.

Ultimately, the decision lies with our students and our families.  There are extremes, such as families willing to sell their homes to finance their child's education.  Most families are unable to do this, however.  As school counselors, it will be up to us to help students and families get an idea of the "whole" picture with regards to college admissions, including the finances, as well as to point out and remind them that a good college education comes not from the name of the school that they attend, but from what they themselves, as the students, make of that education, wherever that college may be and whatever it may cost.