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<DIV class=timestamp><FONT face=Calibri><A
title="http://www.nytimes.com/2011/04/12/education/12college.html?_r=1&partner=rss&emc=rss&pagewanted=print
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<DIV class=timestamp>April 11, 2011</DIV>
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<H1><NYT_HEADLINE type=" " version="1.0">Burden of College Loans on Graduates
Grows</NYT_HEADLINE></H1><NYT_BYLINE>
<H6 class=byline>By <A class=meta-per title="More Articles by Tamar Lewin"
href="http://topics.nytimes.com/top/reference/timestopics/people/l/tamar_lewin/index.html?inline=nyt-per"><FONT
color=#000066>TAMAR LEWIN</FONT></A></H6></NYT_BYLINE><NYT_TEXT>
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<P><A class=meta-classifier title="More articles about student loans."
href="http://topics.nytimes.com/top/reference/timestopics/subjects/s/student_loans/index.html?inline=nyt-classifier"><FONT
title="http://topics.nytimes.com/top/reference/timestopics/subjects/s/student_loans/index.html?inline=nyt-classifier
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color=#000066>Student loan</FONT></A> debt outpaced credit card debt for the
first time last year and is <STRONG>likely to top a <U>trillion dollars</U> this
year</STRONG> as more students go to college and a growing share borrow money to
do so. </P>
<P>While many economists say student debt should be seen in a more favorable
light, the rising loan bills nevertheless mean that many graduates will be
paying them for a longer time. </P>
<P>“In the coming years, a lot of people will still be paying off their student
loans when it’s time for their kids to go to college,” said Mark Kantrowitz, the
publisher of <A href="http://finaid.org/" target=_><FONT
color=#000066>FinAid.org</FONT></A> and <A href="http://fastweb.com/"
target=_><FONT color=#000066>Fastweb.com</FONT></A>, who has compiled the
estimates of student debt, including federal and private loans. </P>
<P>Two-thirds of bachelor’s degree recipients graduated with debt in 2008,
compared with less than half in 1993. Last year, graduates who took out loans
left college with an average of $24,000 in debt. Default rates are rising,
especially among those who attended <A class=meta-classifier
title="More articles about for-profit schools program."
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color=#000066>for-profit colleges</FONT></A>. </P>
<P><STRONG>The mountain of debt is likely to grow more quickly with the coming
round of budget-slashing. Pell grants for low-income students are expected to be
cut and tuition at public universities will probably increase as states with
pinched budgets cut back on the money they give to colleges. </STRONG></P>
<P>Some education policy experts say the mounting debt has broad implications
for the current generation of students. </P>
<P><STRONG>“If you have a lot of people finishing or leaving school with a lot
of debt, their choices may be very different than the generation before them,”
said Lauren Asher, president of the </STRONG><A title=" "
href="http://www.ticas.org/"><FONT color=#000066><STRONG>Institute for Student
Access and Success</STRONG></FONT></A><STRONG>. “Things like buying a home,
starting a family, starting a business, saving for their own kids’ education may
not be options for people who are paying off a lot of student debt.”
</STRONG></P>
<P>In some circles, student debt is known as the anti-dowry. As the transition
from adolescence to adulthood is being delayed, with young people taking longer
to marry, buy a home and have children, large student loans can slow the process
further. </P>
<P>“There’s much more awareness about student borrowing than there was 10 years
ago,” Ms. Asher said. “People either are in debt or know someone in debt.” </P>
<P>To be sure, many economists and policy experts see student debt as a healthy
investment — unlike high-interest credit card debt, which is simply a burden on
consumers’ budgets and has been declining in recent years. As recently as 2000,
student debt, at less than $200 billion, barely registered as a factor in
overall household debt. But now, Mr. Kantrowitz said, student loans are going
from a microeconomic factor to a macroeconomic factor. </P>
<P>Susan Dynarski, a professor of education and public policy at the <A
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color=#000066>University of Michigan</FONT></A>, said student debt could
generally be seen as a sensible investment in a lifetime of higher earnings.
“When you think about what’s good debt and what’s bad debt, student loans fall
into the realm of good debt, like mortgages,” Professor Dynarski said. “It’s an
investment that pays off over the whole life cycle.” </P>
<P>According to a <A class=meta-org title="More articles about College Board"
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color=#000066>College Board</FONT></A> report issued last fall, median earnings
of bachelor’s degree recipients working full time year-round in 2008 were
$55,700, or $21,900 more than the median earnings of high school graduates. And
their unemployment rate was far lower. </P>
<P>So Sandy Baum, a higher education policy analyst and senior fellow at <A
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color=#000066>George Washington University</FONT></A>, a co-author of the
report, said she was not concerned, from a broader perspective, that student
debt was growing so fast. </P>
<P><STRONG>Indeed, some economists worry that all the news about unemployed
20-somethings mired in $100,000 of college debt might discourage some young
people from attending college. </STRONG></P>
<P>A decade ago, student debt did not loom so large on the national agenda.
Barack and <A class=meta-per title="More articles about Michelle Obama."
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color=#000066>Michelle Obama</FONT></A> helped raise awareness when they spoke
in the presidential campaign about how their loan payments after graduating from
<A class=meta-org title="More articles about Harvard University."
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color=#000066>Harvard</FONT></A> Law School were more than their mortgage
payments. </P>
<P>“We left school with a mountain of debt,” Mr. Obama said in 2008. “Michelle I
know had at least $60,000. I had at least $60,000. So when we got together we
had a lot of loans to pay. In fact, we did not finish paying them off until
probably we’d been married for at least eight years, maybe nine.” </P>
<P>Even then, Mrs. Obama said, it took the royalties from her husband’s
best-selling books to help pay off their loans. </P>
<P>In 2009, the Obama administration made it easier for low-earning student
borrowers to get out of debt, with income-based repayment that forgives
remaining federal student debt for those who pay 15 percent of their income for
25 years — or 10 years, if they work in public service. </P>
<P>But if the Obamas’ experience highlights the long payback periods for student
debt, their careers also underscore the benefits of a top-flight education. </P>
<P>“College is still a really good deal,” said Cecilia Rouse, of Princeton, who
served on Mr. Obama’s <A class=meta-org
title="More articles about White House Council of Economic Advisers"
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color=#000066>Council of Economic Advisers</FONT></A>. “Even if you don’t land a
plum job, you’re still going to earn more over your lifetime, and the vast
majority of graduates can expect to cover their debts.” </P>
<P>Even believers in student debt like Ms. Rouse, though, concede that hefty
college loans carry extra risks in the current economy. </P>
<P>“I am worried about this cohort of young people, because their unemployment
rates are much higher and early job changing is how you get those increases over
their lifetime,” Ms. Rouse said. “In this economy, it’s a lot harder to go from
job to job. We know that there’s some scarring to cohorts who graduate in bad
economies, and this is the mother of bad economies.” </P>
<P>And there is widespread concern about those who borrow heavily for college,
then drop out, or take extra years to graduate. </P>
<P>Deanne Loonin, a lawyer at the <A title=" " href="http://www.nclc.org/"><FONT
color=#000066>National Consumer Law Center</FONT></A>, said education debt was
not good debt for the low-income borrowers she works with, most of whom are in
default. </P>
<P><STRONG>Unlike most other debt, student loans generally cannot be discharged
in bankruptcy, and the government can garnish wages or take tax refunds or
</STRONG><A class=meta-classifier title="More articles about Social Security."
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color=#000066><STRONG>Social Security</STRONG></FONT></A><STRONG> payments to
recover the money owed. </STRONG></P>
<P>Students who borrow to attend for-profit colleges are especially likely to
default. They make up about 12 percent of those enrolled in higher education,
but almost half of those defaulting on student loans. According to the <A
class=meta-org title="More articles about the U.S. Department of Education."
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color=#000066>Department of Education</FONT></A>, about a quarter of students at
for-profit institutions defaulted on their student loans within three years of
starting to repay them. </P>
<P>“About two-thirds of the people I see attended for-profits; most did not
complete their program; and no one I have worked with has ever gotten a job in
the field they were supposedly trained for,” Ms. Loonin said. </P>
<P>“For them, the negative mark on their credit report is the No. 1 barrier to
moving ahead in their lives,” she added. “It doesn’t just delay their ability to
buy a house, it gets in the way of their employment prospects, their finding an
apartment, almost anything they try to do.” </P></DIV></DIV></BODY></HTML>