Pamela Jackson owes $97,000. Kyle and Amanda Elliott combined have a $150,000 tab. Doug Roehler also owes $150,000.
If only those numbers referred to the purchase of a home. Rather, these are student loan debts, one of the few categories of borrowing that is still on the rise.
The amount borrowed per full-time student grew by 5 percent a year, adjusted for inflation, from 2000 to 2010, according to the College Board Advocacy & Policy Center.
This graduation season, the average student will leave school with $20,000 or more in loans, according to various expert estimates. As many as one-third of bachelor’s degree recipients can expect to still be paying back their student loans when their own children head off to college, said Mark Kantrowitz, the founder of FinAid.org and FastWeb.com.
“I definitely had no idea what I was getting myself into with loans,” said Jackson, a 24-year-old Atlanta woman whose nearly six-figure debt stems from degrees in communications and art from the University of Miami. “It’s so easy to sign your name to them and when you’re in school, it just feels like free money getting thrown at you.”
Students’ debt loads would be less problematic if they could be confident of finding work in their field of study, but since the Great Recession, many have struggled to do so.
Just ask Amanda Poole, a 35-year-old Kennesaw woman who went back to school eight years ago for degrees in Web and interior design. She still owes roughly $90,000.
She graduated in 2007 and happily began to work with a seasoned interior designer, only to be laid off the next year. Her attempt to launch her own interior design business failed, so she’s back in the same part-time job she held before and during school.
In hindsight, Poole regrets spending the money on her education. She’s paying off only fractions of the amount she owes each month, and her family has sacrificed household improvements and vacations.
“I’m lucky just to pay a minimum balance just to keep the phone from ringing,” she said.
As a nation, we now owe more on student loans than credit cards, Kantrowitz said. Part of that, he said, is due to a decline in credit card debt. On the flip side, more students are attending college, while need-based grants haven’t kept pace with increasing tuition rates. Kantrowitz expects the outstanding total of all U.S. student debt to top $1 trillion this year, he said.
“Student loan debt is a macroeconomic factor,” he said, which “has grown enough to have an impact on the economy.” Even though educational outlays are generally considered a wise investment, he said, “too much of a good thing can be bad.”
Many Americans are doubting the value of their degrees.
A report released this week by the Pew Research Center indicates that the majority of Americans — 57 percent — believe students are not provided with good value for the money they and their families spent on a college education.
Further, 75 percent believe college is too expensive for most people.
Nearly half of respondents — 48 percent — said they graduated with significant debt that made it harder to pay other bills. One-quarter said it’s made buying a home difficult, and the same number said it’s affected their career choices.
Looking back, Amanda Elliott wishes she had gone to a more affordable school or received more scholarships. She and her husband, Kyle, combined owe $150,000 in loans because of her bachelor’s degree in English from Emory University and his undergraduate and graduate studies in biomedical engineering and later anesthesia at the Georgia Institute of Technology and South University, respectively.
She’s now a stay-at-home mom while Kyle works as an anesthesiologist assistant. They joke they could own a second home if not for the $1,661 they pay each month in student loans, she said.
They hope to have the total debt paid off in 10 years or so, Amanda Elliott said, just a few years shy of when their own two children will be heading to college.
Despite the mounting student debt, college degree still translates into greater earning potential, experts say. Over a 40-year career, those with four-year college degrees can expect to earn about $3.3 million — roughly double what a high school graduate will earn, the Pew report indicates.
Doug Roehler, who graduated last month with a master’s degree in public health from the University of Michigan, is confident that the $150,000 he paid for his undergraduate and graduate degrees are worth the investment, even if he’ll be paying back the debt for the next 25 years. He is moving to Atlanta in two weeks to start a job in public health and counts himself fortunate to have found employment in his chosen field.
“I have learned there is no use in complaining about how much debt one has to pay back, because the debt is not going anywhere,” he said. “I can either spend the next 300 months in a bad mood whenever I write a student loan check that takes well over a quarter of each of my paychecks, or I can think of it as the repayment to the best investment anyone can make — education. I’ll take the latter.”
PAYBACK GOES ON AND ON
1 The average college student graduates with at least $20,000 in student loan debt.
2 Americans now owe more on student loans — roughly $1 trillion — than on their credit card balances.
3 One-third of recent graduates will still be paying off their student loans when their children enter college.
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