Student loan debt: burden or blessing?

Kyra and Tommy Dornish go over their monthly bills as they juggle repaying student loans .

Kyra and Tommy Dornish go over their monthly bills as they juggle repaying student loans .

Story, photos and graphics by Julia Peterson and Miranda Milovich

For hundreds of thousands of students who will graduate from college this month, it may appear that freedom is right around the corner. But according to a recent CNN Money report, seven out of 10 American college students will be shackled with paying back student loans for years to come.

National Problem

According to the report, the average amount of debt for graduating seniors nationally in 2012 was $29,400. In Nebraska, the average is about $26,400.

“As of right now, until I can make bigger payments, I don’t know when I’ll be able to pay these loans off,” Meghan Johns, who is working on paying off about $14,000 in loans, said. “I’d say 10 plus years.”

Johns, a 2013 University of Nebraska-Lincoln graduate started paying back her loans in December. She is now making the minimum payment each month–$250 and she said that only about $50 of that is going toward her actual debt. The rest is covering interest.

7in10Johns also said that she is struggling to find a job in her field, religious studies, and is realizing that it may be necessary for her to go to graduate school if she wants find work. However she said she doesn’t feel comfortable going back to school until she has her loans from the first time around paid off.

“I won’t go back to school if I don’t have to because I don’t want to get into this situation again,” Johns said. “But if I can’t even open a door to get a job, which is what I’m running into now, I will have to go back to school and sink further into debt.”

Plans On Hold

Student Debt has increased significantly in the past few years.

Student Debt has increased significantly in the past few years. Source: Institute for College Access & Success, College InSight. In 1984, according to estimates by the San Francisco Chronicle, only half of graduates had debt from college loans, averaging about $2,000. Now, two-thirds of recent bachelor’s degree recipients have outstanding student loans, with an average debt of about $27,000, according to a Pew Research Center report.

Ashleigh Hampf graduated in December from the University of Colorado at Denver with a master’s degree in public history. She now works at a Denver museum and will have to begin paying back her student loans in June.

“As of now I’m on the lookout for new jobs to supplement my income,” Hampf said.

The 25-year-old  recently moved out of her parent’s house and got an apartment with her boyfriend. When she starts paying back her loans this summer,  the payments will be about as much as her rent.

“My boyfriend and I would like to get married and start a family someday and buy a house,” Hampf said. “But all of that will have to be on hold for a little while.”

Kyra and Tommy Dornish didn’t want to delay their plans just because they were paying back loans. The newlyweds graduated in May 2013 and got married last October. They both have student loan debt and are tackling it together. One way they are doing this is living in an inexpensive apartment. Another is by cutting out monthly extras.

“This month we’re not going out to eat at all so we can save more money so we can put more money toward student loans,” Kyra said.

Kyra is currently a graduate student at UNL studying international family studies. She has an assistantship that pays her tuition so she hasn’t had to take out more loans. Tommy works at Lincoln Public Schools Employees Credit Union.

“It’s dictated our lives in that it’s our main goal financially to pay those off,” Tommy said. “So we put a good portion of money of our wages to student loans every month.”
Click open the video below to hear more about the Dornish’s student loan challenges.

A Look On the Bright Side

Despite all the challenges that student loan debt seems to cause recent graduates, Eric Thompson, an economics professor at the University of Nebraska—Lincoln and the director of the Bureau of Business Research, said that loans aren’t all bad.

“Overall, student loan debt is a positive thing because it helps students pursue their education,” Thompson said. “That benefit alone outweighs the burden of the debt.”

Thompson, who said it took him 10 years to pay back his own student loans, also said that students who have to take out money to pay for college are more invested in their education—literally, so they work harder. He also said that paying back student loans is good practice for other major payments that people have to make in their lives.

“Some students have other debt, like credit card debt, or a car payment, but for other students who haven’t borrowed before it can be a good learning experience,” Thompson said.


While Nebraska college graduates average lower student loan debt, they will still face repaying several hundred dollars a month for up to 10 years to repay student loans. Source: Institute for College Access & Success, College InSight

Katlin Evans, a senior elementary education major who will start making loan payments next June, disagrees.

“I think you can build responsibility in other ways besides saddling yourself with thousands and thousands of dollars in debt,” Evans said.

Johns agrees.“There are multiple other ways to get practice for that, like getting an apartment,” Johns said. “I really think that student loans are more of a problem than a help.”

Craig Munier,  the director of scholarships and financial aid at the University of Nebraska-Lincoln and the chair of the National Association of Student Financial Aid Administrators, said that he’s worried about the fact that federal grant money is lessening, so the expense of higher education is falling more and more on the student.

Each month students must make a payment on their loan.

According to a CNN report, the average amount of student loan debt for graduating seniors in Nebraska is roughly $26,400.

Students are taking out more in loans and he’s afraid that eventually students will have to take our more than they can pay back.

“More and more the burden of college falls on the individual,” Munier said. “That will not serve society well.”

But Patrick Reeves said that the benefits he receives from taking out student loans does outweigh the costs he will have to repay once he graduates. For him, taking out loans was the only way he could get an education.

“I’m going to better myself with getting this education,” Reeves said. “It was kind of a necessary evil.”

When Reeves, a civil engineering major, graduates in 2015 he said that he will have about $30,000 in debt. He is hoping to find work with a government agency after graduation because they offer loan forgiveness programs.

Forgiveness Programs Promise Relief

The Public Service Loan Forgiveness Program offers graduates a chance to have their slate wiped clean of student debt, according to the Federal Student Aid website. The site states that a graduate with loans taken out after 2007 can work for a government agency while still making payments toward their loan, and at the end of ten years of work their loans will be forgiven.

If a Nebraska college graduate had the average loan debt of $26,473 they would have to pay $304 a month for 10 years at the prevailing interest rate to repay the loan.

If a Nebraska college graduate had the average loan debt of $26,473 they would have to pay $304 a month for 10 years at the prevailing interest rate to repay the loan.

But there are a number of parameters to the deal with, such as students must enter a repayment plan in order to qualify for the program. This plan lowers payments, but loans will continue to earn interest. If a worker leaves their job for some reason, they will be responsible for paying the remaining balance.

With the accumulated interest it would be higher than if the individual had made their original monthly payments.

Other types of organizations are beginning to offer a somewhat similar option. SponsorChange, a non-profit founded in 2009 in Pittsburgh, allows individuals to volunteer in their communities in exchange for loan forgiveness. Students can sign up with an organization already connected with SponsorChange in order to take advantage of the opportunity.

Another Option: Deferment

Other students choose to defer their loans until they’re able to pay. Deferring payments means a student wouldn’t be saddled with a monthly payment right after graduation, but the loans still earn interest.

Cole Keaton a May 2013 graduate from UNL was supposed to start paying back his loans last December. Instead, he decided to defer because he was only working part-time and said he couldn’t see a way to make payments while dealing with other expenses, such as rent, gas and groceries.

He is working full-time now and hopes to be able to start making payments soon, but he said that the interest that has built up on his loans in the past six months is daunting.

Jeremy Hoff graduated from the University of South Dakota in 2001. He deferred his loans after graduation and now the 37-year-old is still struggling to pay them off.

That’s because interest on student debt can build quickly. Loans taken out prior to the 2013-2014 school year will still earn 6.8 percent interest even though the White House has now approved a plan that has cut student loan interest to 3.8 percent.

Marilyn Buresh graduated in May 2013 with a degree in business management. Her parents paid her student loans off for her within six months of her graduation, but even in that short period of time, her debt earned $800 in interest. That could pay for a semester-long course at UNL– or an entire semester of classes at Southeast Community College.

Evans, who went to Southeast her first year of college to save money, has $10,000 in loans from her three years at UNL.

“As an education major, I of course think education is the best. And I think no matter what you should go to college,” said Evans. “But I can’t imagine if I had $30 to $40,000 in student debt. You know, I don’t know if I would think college was worth it.”

Click on the video below to hear UNL student Katlin Evans describe how she thinks her student loans will affect her life after she graduates this December.

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