Education

The Real Crisis of the Student Loan Crisis

Not counseling high school students and their families on the intricacies of student debt is a disservice.

I graduated from high school in 2008 — starry-eyed, barely an adult with the cookie-cutter ambition of graduating a four-year college to lock in my bountiful future of success. Nothing would stop me! Definitely not a $24,000 tuition.

Did I have a sweet college fund waiting to actualize my dreams?

*cue my obnoxious bout of sarcastic laughter.*

Surely graduating nineteenth out of a class of over 400 would give me a free ride or something.

*cue the admission board’s obnoxious bout of sarcastic laughter.*

“Fret not,” I thought. “Good ol’ FAFSA’s got me.” And she did. After pulling out the sob story of my life and begging for all the money I could get, I took all those loans like a ravenous zombie. There wasn’t a single thought about what signing those promissory notes would mean for me in the future. I knew nothing about the difference between unsubsidized and subsidized Federal loans or exactly how interest will be accruing. As long as I saw a $0.00 balance on my account so I could register for classes, it was all just money to me.

The lesson would eventually come. It came after accruing thousands of dollars of interest on over $50,000 dollars of loans. It came after I received a bill six months post-graduation to pay almost $600 monthly with a $38,000 pre-tax entry-level salary and $950 of rent. I’ll skip everyone the math and say it gets pretty hard to live.

Call me irresponsible or ignorant since there are many points in this story that I can place blame on myself for getting into such a bind. I should have applied for more scholarships or I should have gone to community college or I should have budgeted better.

Yet…I think about how this story is all too common. I’ll speak from my personal experience and observations. From that alone, I’ve watched two waves of high school graduates in my family, since my graduation, sink right into this trap; this is after tens years and almost $40,000 of school debt I thought was supposed to be paid off already. Why did we all end up in the same stupid position?

Here’s where my frustrations lie.

While in high school, there were guidance counselors: the beacon of lights guiding lost teens to The Way. Doing so involved providing academic advising on appropriate course loads to take, assistance with college applications if the student chooses that route, and directing students to applicable scholarship opportunities.

I am grateful for the guidance offered. However, the focus is on how to get into college. That’s great and all but beyond scholarships and FAFSA, I can not remember my guidance counselor telling me how the heck I would stay in college if all those other options weren’t enough to afford it.

Granted, a guidance counselor’s profession does not include financial advising. I can respect that. But, if the energy is going to be spent assisting students with getting into college and discussing some of the financial options for making that happen, students and their parents should be given full disclosure on what the financial options look like and what it means for them in the future.

To me, there lies the actual crisis in this whole student loan debacle. Young eighteen-year-olds, especially minorities and children of immigrants, are making lifelong decisions when accepting loans without any counseling on precisely what these loans mean and what kind of impact it could have on their future. To me, that is a disservice.

It sounds dramatic, but let’s think about it this way. I know for sure that I was one out of about 400 graduates back in 2008 that did not receive critical information about loans from my guidance counselor. I imagine the other 399+ students didn’t either. Then we have my cousins that recently graduated this past year. I asked them if anyone explained the difference between the various types of loans offered, for example. They said no. They also graduated from a class of approximately 400. That means, in ten years, that’s about 4,000 students that went through the high school system never receiving full disclosure on exactly how student loans work. That’s just one school.

Just for poops and giggles, I’ll throw in data from a survey of 1,200 high school juniors and seniors conducted by the ACT Center of Equity in Learning to prove my family and I are not just isolated incidents or ignorant imbeciles.

An overwhelming majority (ranging from 73–81 percent across income groups) didn’t know that the government “subsidizes” a borrower by paying his or her interest on existing loans while the student is still in college. Those from the most well-off families performed the best on the question in relation to other income groups, but no one group showed proficiency with the question.

Because pictures (and graphs) speak a thousand words, here’s a result of a survey conducted by Federal Student Aid.

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Even if the country’s student debt continued to rise another trillion dollars and students happily took on the debt, I’d rest easy knowing they were given all the information necessary to make an informed decision. The goal isn’t to dissuade them from pursuing higher education or even getting loans to do so. The goal is to care enough about their future to give them all the information we can so they don’t have to learn the hard way.

A general rule of mine after ranting or complaining is to plan to be the change I want to see. So here’s my vision that I hope will come to fruition before another ten years goes by continuing the cycle.

I’d love to start or be part of a non-profit student loan counseling/intervention service that strictly focuses on counseling students and their guardians before they make decisions about funding their future higher education plans. I’d love to fill in the gap in the comprehensive information found on studentaid.ed.gov and share with them what I wish someone had told me: a transparent, realistic, big-picture perspective.

For instance…

Federal loans are not free money.

When the message learned from family and school is loans should be welcomed with open arms because college is a necessity for success, it became easy to treat loans as free money. The view on loans is short-sighted tunnel vision that looks something this:

“Repay it in ten years, you say? I can do that, no problem. Easy-peasy. It’s better than a dumb thirty-year mortgage”

“You want to give me $5,000, FinAid? Oh, I could pay that back, no problem. It’s not that bad at all.”

When the realty is…

A standard ten-year repayment is applicable if you can make the monthly payments without changing your repayment plan. Changing your repayment plan can double the life of your loan. Rather than ten years, it now becomes twenty-five. Therefore, you’ll need a clear understanding of repayment plans.

Interest is real. This is when you’ll need to know the difference between which of your loans are subsidized federal loans and which are unsubsidized federal loans. Interest accrues every…single…day, even on Christmas. Just because you had that nice round number of $5,000 that looked reasonable, don’t forget that you may need to multiply that by the number of years you’re in school. Then, if it’s an unsubsidized loan with a higher interest rate that the government is not paying while you’re in school, that $5,000 is getting bigger, and bigger, and bigger.

But, if you have a little something-something that you don’t need to use to do laundry every month, you can start paying some of that interest while you’re still in school to lessen the load later on.

Base a school’s affordability on what YOU can afford.

Again, the message is, get into the best schools, or else you’re a sap. But, those “best schools” are expensive as hell, so reality kicks in and I settle for something a little below the best. Price-wise, $24,000 looks way better than $36,000.

When the reality is…

Your current financial situation determines what’s affordable, not a comparison of tuition prices amongst schools. Look at college as another purchase. When making a purchase and being financially wise, you assess your finances and determine how much you can contribute to the purchase after accounting for income, fixed, and miscellaneous expenses. Do the same with college before your Financial Aid package comes in the mail.

Since we’re being real, the number you calculate for out-of-pocket expenses will most likely look like chump change compared to the cost of higher education. Hence, Financial Aid was put in place to level the playing field. This does not mean you must automatically accept Federal loans granted to you. Make an informed decision after clearly understanding the numbers; future monthly loan payments in light of the average cost of living and the average salary for your desired field of work are some examples.

Determine if you can cover ALL tuition fees before enrolling.

I got into a school, a milestone to celebrate. Without hesitation, I said yes and enrolled. However, there was room and board fees, meal plan fees, and other random fees that weren’t fully covered yet, but I could sort that out later. For now, freedom awaits!

When the reality is…

No, it doesn’t. When registration season comes along and you’re scrambling to remove the block on your account because you have a balance, you become more susceptible to taking on higher-toll loans such as PLUS loans or private loans that require a co-signer.

If that’s a route you wish to take, it should be a thoroughly thought out decision made by all parties involved with no rush. It isn’t pleasant for a potential co-signer to feel pressure to co-sign a loan because that’s the only option you have to get at least those first-semester credits you worked so hard on.

“Children are the future” isn’t just a cute little saying. It is my way of life. My passion for the generation coming after me runs deep and drives so much of what I talk about. I want them to know we care enough to steer them away from the same paths we’ve fumbled and slipped on.

If I had known all the information I should have known about student debt, would it have made a difference? I can’t say for sure. What I do know is that I wish someone told me.

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Learning to be human. Learning to love bigger.

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