Brianna Kitchings and Cori Wright are Wichita State University students three years out of high school.
They take full class loads while working nearly full time. Kitchings serves asvice president of the student governing association (a paid job) and sometimes works with a child with disabilities. Wright does home health care for young people with disabilities. In other words, they are bettering themselves and taking personal responsibility, said William Elliott III of the University of Kansas.
What could be wrong with that?
Nothing, except their debts.
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Kitchings and Wright, both 21, each owe more than $25,000 already, mostly in student loans, and though they will be seniors this year, they will likely not graduate until 2015, when their debt might exceed $40,000 each.
And costs keep going up.
Wichita State has raised tuition every year for the past 10 years, including 8 percent this year and 4 percent last year. Tuition and fees for one semester of 15 credit-hours now cost $3,463.25, and housing at the Fairmount Towers dormitory is $1,836 a semester.
Elliott, an assistant professor in the School of Social Work at KU, has studied student debt for 10 years. He says hard-working young people are being crippled economically all over the country, and he thinks we should all care about student debt even if we don’t go to college or have loved ones who want to.
We are hollowing out the future of our young people – and hollowing out our economy – Elliott and other student debt experts said.
His advice to parents: Start saving for college even before your kids are born.
On June 25, Rohit Chopra, assistant director and student loan ombudsman for the Consumer Financial Protection Bureau, a federal agency, told a U.S. Senate committee on Banking, Housing and Urban Affairs that working Americans now owe $1.2 trillion in student debt.
As a result, Kitchings, Wright and millions of other college graduates with high debt but limited prospects of high-paying jobs might put off buying homes, a key spur to the economy, Elliott said. They will likely put off buying new cars.
In hock for years, or decades, they may put off getting married, starting families and building nest eggs.
That’s bad news for all of us, he said.
In Kansas this year, legislators and college leaders blamed each other for rising tuition costs. Kitchings and Wright, facing more years of debt, were not impressed by the dispute.
“All those two sides really did this year was talk past each other,” Kitchings said.
How bad is it?
Politicians create federal student loans to help people get through college. Some politicians, echoing complaints from state legislators, say the loans made “easy money” available, allowing universities to raise tuition rates conscience-free. U.S. Rep. Mike Pompeo, R-Wichita, on Thursday said the easy money contributed to a drive by universities to raise tuition beyond what inflation required. He also thinks some young people burden themselves with student loans because they have the mistaken notion that the government will someday pay off the loans.
One solution, Pompeo said, would be to make universities pay off at least part of defaulted loans. It would make them think harder and be more responsible about college costs, he said.
Not all agree.
College costs rose so high, Sandy Baum says, because society collectively decided college is really important at the same time that society – through elected state legislators – decided we don’t want to pay for it. Demand went up, more students enrolled, and pressure grew just as politicians began cutting budgets.
Baum is a senior fellow at George Washington University Graduate School of Education and a frequent contributor to research done for the College Board, a nonprofit voice for universities.
Nationally, she said, state legislators complain that colleges are not doing enough to save money, and she said this is true to some extent. But she said legislators nationally also decided to cut higher-education funding year after year at the same time that the economy was mandating a more educated workforce. “Let’s cut them and they will spend less and everything will be fine,” she said. But it’s not fine, she said.
In the 1970s, state support for public universities in Kansas was about 75 percent of the WSU budget. It is about 22 percent now.
In 2008, while Wright and Kitchings were still high school sophomores, WSU administrators estimated student debt there was about $20,000.
It’s now reached $23,387, said David Wright, WSU’s associate vice president for academic data systems and strategic planning. In all of Kansas, according to the Project on Student Debt, 64 percent of 2011 college graduates have debt, and the average for them is $23,321.
Nationally, according to the Project on Student Debt, two-thirds of college seniors who graduated in 2011 had student loan debt, with an average of $26,600 per borrower. The unemployment rate for recent college graduates is 8.8 percent.
Credit market institutions are already stressed. At least $8 billion of private student loans are in default, representing more than 850,000 individual loans, according to the Consumer Financial Protection Bureau.
Opinion is divided about what this means. Elliott and others say this problem will cripple the ability of many families to get their lives started and will slow their ability to contribute to the economy in the way that earlier generations did. Baum says these dangers are “exaggerated” for the economy and not nearly as potentially damaging as the housing crisis.
The only thing most agree on is that students and parents are hurting. That’s no comfort to Kitchings, a 2010 graduate of Blue Valley High School in Kansas City, or Wright, who graduated the same year from Wellington High School. They do not plan to get into professions that pay big money. Kitchings wants to become an elementary school teacher. Wright’s major is English literature; she wants to get into speech language pathology.
They both said they chose WSU because it is more affordable than other schools.
“I think education should be the last thing anybody should be cutting from a budget,” Wright said. “But obviously someone doesn’t agree.” She knows legislators cut taxes to try to boost economic growth; she wonders whether that will work.
Legislators such as state Sen. Susan Wagle and House Appropriations Chairman Marc Rhoades say that they care about universities, students and parents as much as anyone, that the tuition increases of the past few years deeply trouble them and that they are committed to the tax cuts as a way to revive the economy and to help create jobs for future college graduates.
Make good choices
If you must borrow, Baum said, borrow using federal student loans rather than private loans. The reason: The government won’t make you pay more than you can afford down the road. Private loan institutions won’t be as considerate.
Lauren Asher, another national expert on loans, agrees. She’s the associate director of the Project on Student Debt and said student loans are now the mainstay of getting through college.
• Stay away from private loans.
• Choose federal student loans instead.
• Try to “power through” college as fast as you can, and rather than work full time, go part time; you’ll be much less likely to drop out.
• Make a budget so you know the “real net price” of college, including books, food and housing; don’t just look at the “sticker price” of tuition and fees.
“Private loans are much riskier for borrowers,” Asher said. “You can be very vulnerable.” The terms of federal student loans are more reasonable and safer. Student loan repayments are tied to income; if you’re not earning much, you don’t have to pay much back year by year.
Her group is so concerned about nonfederal student loans that its lays out national debt numbers state by state (http://projectonstudentdebt.org). For example, 66 percent of the class of 2011 at Kansas State University had student debt, averaging $23,857. Most of these people were in good shape, relatively speaking, because only 6 percent of the total debt of these KSU grads was owed to nonfederal creditors.
But KU and WSU? Not nearly as good. Of the WSU 2011 class, 62 percent were in debt, which averaged $21,738 apiece, and of that total debt, 33 percent was owed to nonfederal creditors. At KU, 53 percent of the 2011 class owed an average of $22,114 apiece, 20 percent of the total to nonfederal loans.
Elliott, the KU professor, thinks society should push hard for lifelong savings, with some government help, carved out of the billions taxpayers already spend on subsidizing loans and other education costs.
But under current conditions, Asher said, states have pulled back so drastically on their support for universities, and costs have gone up so much, that there is no other good choice, she said. Government has shifted the burden of college to students and parents, with many of them having to borrow heavily.
Elliott has one other suggestion.
Individuals and families who kept putting money into their children’s savings accounts appeared to actually affect the outcome of what their children did about college, he said.
They seemed eager to work harder in high school, get better grades and prepare for college. “Doing this seems to have changed outcomes in these families,” he said. They developed hope, plans and good attitudes. “And once they got into college, they seemed more inclined to stay,” Elliott said.
Parents, he said, need to start saving money for their children’s college education when their kids are born.
Contributing: Dan Voorhis of The Eagle