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Drowning in a sea of debt: more students are taking out college loans, and for greater amounts than ever. Some are asking whether it's worth it.

Every so often, when the phones grow quiet, Margot Miles glances at the lawyers working around her and thinks: "I could do that. I would love to do that." She smiles as she envisions life as a lawyer--fighting injustice, changing the world--until she remembers having $25,000 in undergraduate loans.

"I say to myself: `One day I'm going to do something phenomenal with this phenomenal education. I have to,'" says Miles, a legal secretary who graduated from the University of Pennsylvania five years ago. "But it's just so hard to imagine taking out any more loans."

In their trek through college and beyond, student borrowers now amass an average of $27,600 in educational debt, almost three and a half times what they compiled a decade ago, according to a new survey by Nellie Mae, the student-loan company. And as college tuition has climbed, so has the number of students who borrow to help pay for it. Ten years ago, about 46 percent of graduating seniors had taken out educational loans, according to the National Center for Education Statistics. By 2000, the figure was roughly 70 percent.

The growing debt has begun to encroach upon other major purchases, such as homes, and compels more than one in six borrowers, like Miles, to revamp their career goals to pay off loans, the survey found. What's more, fewer students than ever say that taking out college loans was worth it.


When Nellie Mae asked its borrowers a decade ago whether the benefits of their educational debt overshadowed the downside, nearly 75 percent gave a resounding yes. Now, the figure is just 59 percent--a warning sign that students might begin shying away from universities, or at least the more expensive ones.

"What's so worrisome is that for the first time, a lot of students are questioning whether they should have borrowed so much money," says Sandy Baum, an economics professor at Skidmore College in New York. "what will happen when people decide it's not worth it and won't go to college at all? We're not there yet, but we're really dose."

Even after adjusting for inflation, the tuition and fees at private and public universities have more than doubled in the last 20 years. Although grants have increased as well, they have not nearly kept pace with the cost of higher education.

The outcome is that loans have essentially swapped places with grants on the seesaw of educational finance. As recently as 10 years ago, for example, loans accounted for a little more than 45 percent of all financial aid in the nation, according to the College Board. Today, they make up 54 percent.

70 HOURS A WEEK FOR $70,000

"The truth is, it's a lot easier to increase loans than grants," says Ken Redd, research director of the National Association of Student Financial Aid Administrators.

All this leaves some wondering if higher education is worth the expense. College graduates can expect to earn $1 million more during their careers than those with a high-school diploma, the College Board says, and advanced degrees are worth evenmore.

The impact of student debt varies greatly, shaping future decisions in the most unpredictable ways. For example, Anisa H. Brophy, 22, is an aspiring comic-book author who took out $70,000 in loans to get a bachelor's degree from Wilson College in Pennsylvania. It now takes her 70 hours a week of tutoring, freelancing, and stacking books just to keep creditors at bay. "Spending all that money and not making the most of my degree is not something I'm going to tolerate," says Brophy. "I refuse to waste my degree."

Connie Chavez, 22, on the other hand, has only about $10,000 in loans, but the mere thought of them rattles her so thoroughly that she has for now given up on her dream of going to business school. Her sole priority is finishing her senior year at Hofstra University, then finding a job that pays well enough to stamp out her debt.

"I have friends who graduated in May, and they can't find anything in their fields," Chavez says. "They're working in CVS or Pathmark, waitressing, and doing other things that pay so minimally. How are they going to pay back tens of thousands of dollars?"


Statistics suggest that family background plays a big role in determining how students respond to higher debt levels. According to the Nellie Mae survey, 62 percent of low-income borrowers said they regretted taking out so much in loans, compared with about half of those from families that were too well-off to qualify for federal grants but borrowed elsewhere.

Aaren Hatalsky, 25, borrowed $25,000 to attend Union College in New York, and now she regrets it. "I feel incredibly trapped by my student loans," says Hatalsky, the office manager at a social-service agency. "The moment I walked across the stage and got that diploma, I felt like, `Oh boy, somebody's after me, there's no place I can hide.' I feel as though someone has put a price on my head."


lesson plans


* Were you aware of the fact that college graduates earn, on average, about $1 million more during their careers than high-school graduates?

* How would you respond to someone who said going to college was not worth the cost?

* Do you plan to go to college? If so, does debt concern you?


To help students understand why many college graduates must pay back huge loans and why many regret their loans.


CRITICAL THINKING 1: One problem associated with rising college debt is how the steep rise in college costs may affect the future of the country. Consider the remark by Sandy Baum: "What will happen when people decide it's not worth it and won't go to college at all?"

Professors like Baum may find themselves unemployed if enough young people sidestep college. But is Baum referring to another aspect of the rising-regret phenomenon? Remind students that the U.S. is a world leader in science and technology and that Americans, on average, enjoy one of the world's highest living standards. What will happen if only the wealthy can afford college? Will the U.S. slip back to a time when most people lived hand-to-mouth and the country was controlled by a tiny, wealthy minority?

CRITICAL THINKING 2: Write "GI Bill" on the board. Do any students recognize the term? Explain that in 1944, during World War II, President Franklin D. Roosevelt signed the Servicemen's Readjustment Act, better known as the GI Bill of Rights or the GI Bill. The act provided educational and other benefits for veterans after the war. By 1946, 2 million veterans took advantage of the act, most of them going to college. In 1947, 49 percent of college students were there because of the act.

Economists agree that the program helped the U.S. leap ahead economically by providing graduates with the skills they needed to get better jobs. Does the U.S. need a new government-funded GI-style bill to help young Americans get ahead while avoiding deadly debt?

CRITICAL THINKING 3: Refer to Margo Miles, who would love to become a lawyer, but can't imagine more education loans. Or Connie Chavez, who says her friends can't find any jobs related to their fields of study. What do stories like these say about the economy, when college graduates--debt or no debt--have such difficulty finding good jobs?

GREG WINTER covers education for The New York Times.
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Author:Winter, Greg
Publication:New York Times Upfront
Geographic Code:1USA
Date:Mar 7, 2003
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