January, 2012

Jan 12

Weighing Your Options For Grad School

Graduate school debt is like high blood pressure- it gets less attention than far deadlier maladies, but it certainly isn’t good for you. Sure, a graduate degree is becoming, faster and faster, a prerequisite for certain classes of jobs, not to mention the key to entry into an academic career. Yet, for those who aren’t able to commit to a funded PhD, or who are paying out of pocket for a Master’s degree to advance in the workplace, keeping an eye on the cost is a necessity.

With some federal graduate student loans on the brink, prospective grad students may have to make painful cost-benefit decisions on whether pursuing an interest will ultimately lead to a paycheck. AOL’s Daily Finance offers a way to quantify these questions, if you are math-minded. As they say, “prospective grad students should calculate what their expected salary [is] at graduation, then borrow no more than that amount.”

As we’ve seen before in the case of undergrads, the choice of degree makes a difference in ultimate salary and employability. And now, with an undergraduate degree gradually becoming less valuable, the same axiom holds true for graduate degrees, as well.

While it’s perhaps not surprising that students with higher degrees in media or arts would have lower starting salaries relative to debt, it’s a bit more discomfiting to imagine computer programmers and lawyers suffering from the same fate. (Click on this last link for a report from the Georgetown University Center on Education and the Workforce which details these findings, a solid resource brought to our attention by Daily Finance.)

If you like your numbers a bit more concrete, try FinAid’s Master’s Student calculator, which helps put the lessons above into practice.

- Matt

Jan 12

President Obama Talks Student Debt

In case you missed it, during President Obama’s State of the Union address last week, there were plenty of mentions of student debt. It seems like we’re in for quite the exciting battle to reform the U.S. loan system and make it easier for students to get an education.

Read the juicy bits below:

“When kids do graduate, the most daunting challenge can be the cost of college.  At a time when Americans owe more in tuition debt than credit card debt, this Congress needs to stop the interest rates on student loans from doubling in July.

Extend the tuition tax credit we started that saves millions of middle-class families thousands of dollars, and give more young people the chance to earn their way through college by doubling the number of work-study jobs in the next five years.

Of course, it’s not enough for us to increase student aid.  We can’t just keep subsidizing skyrocketing tuition; we’ll run out of money.  States also need to do their part, by making higher education a higher priority in their budgets.  And colleges and universities have to do their part by working to keep costs down.

Recently, I spoke with a group of college presidents who’ve done just that.  Some schools redesign courses to help students finish more quickly.  Some use better technology.  The point is, it’s possible.  So let me put colleges and universities on notice:  If you can’t stop tuition from going up, the funding you get from taxpayers will go down. Higher education can’t be a luxury -– it is an economic imperative that every family in America should be able to afford.”

For the whole transcript, head over here.

Jan 12

Repo Men – Student Loan Edition

via the New Yorker

Jan 12

The Future of College

Given the current financial environment and the rapid societal changes propelled by technology, the colleges of the future may become an institution that we hardly recognize.

Over at OnlineUniversities.com’s blog, the organization posits that thanks to improvements in technology and the significantly reduced cost of communicating via the Internet, a physical campus may become a thing of the past. Meanwhile textbooks are likely to become digitized saving students money and conserving paper and ink.

As for the education itself, credit hours could become obsolete and university students could spend less time earning their degrees.

To find out what else is expected to change and why, head here to read “10 Things You Won’t See In the College of the Future.”


Jan 12

So That’s Where All Our Tuition Has Gone – Sports

With lawmakers slashing school budgets, administrators forced to raze entire departments, college football and basketball programs are living large.

A recent New York Times article points to the work of Charles T. Clotfelter, a public policy professor at Duke and the author of “Big-Time Sports in American Universities,” who notes that from 1985 to 2010, the average salaries for football coaches rose 650 percent compared to 32 percent for full professors and 90 percent for presidents.

Meanwhile, spending on athletics has also shot through the roof. In 2009, the ten highest-spending athletic departments spent a median of $98 million compared with $69 million just four years earlier.

To put that into context, last month Ohio State hired a new football coach for $4 million a year with bonuses and personal use of a private jet. Meanwhile Gordon Aubrecht, a physics professor at Ohio State, does not have enough money to attend conferences.

More disturbingly, Big Ten colleges spent a median of $111,620 per athlete and only $18,406 per student on academics.

Defenders of big college sports programs argue that successful high-profile sports teams make millions of dollars, draw admissions, and raise the school’s stature, but upon closer inspection of the numbers that is not necessarily true.

According to the Department of Education, in 2010 Penn State spent $19.5 million on its football program and received nearly $73 million in return. But Penn State is an exception, only half of major Division I programs are profitable, while the rest are forced to rely on school funds and student fees to stay afloat.

Allen Sack, the president of the Drake Group, a network of college faculty that pushes for academic integrity in college sports, elegantly sums up the problem.

“In China and other parts of the world, there are no gigantic stadiums in the middle of campus. There is a laser focus on education as being the major thing. In the United States, we play football,” Sack said.

In light of the United States dropping precipitously in its ranking in terms of graduating its citizens from college, this is a pretty damning statement.

Aside from taking away from spending on academics, it seems that sports actually have a negative impact on students’ grades.

According to Glen R. Waddell, an associate professor of economics at the University of Oregon, for every three games won by the school’s football team, grade-point average for men dropped 0.02. Apparently women’s grades didn’t suffer at all.

While I was never a huge fan of sports in general, I recognize their importance in bringing the campus together and providing a welcome outlet to the pressures of college life, but not at the expense of academics – the sole reason why colleges exist.

For more of this interesting argument, head over to the New York Times.


Jan 12

The Big Numbers Keep Getting Bigger

All of us here at Pluck have spent the last few weeks overwhelmed by big numbers, a side effect of digging into the mire of student debt in America. But we were hardly prepared for one sum: $422, 320.

According to a report by The Daily, that’s the estimated total facing graduates in 2034 if they choose four years at one of the country’s most expensive universities. The math accounts for an expected 3.5 and 4.5 percent increase in tuition at private and public colleges, respectively, alongside the added dollops of room and board on top.

Though the $400k chunk is on the higher end of pricing, the median isn’t particularly encouraging, either. As The Daily reports, their inflation-adjusted estimates show “a projected $288,000 in 2011 dollars for four years beginning in 2030 at an average private school and $123,000 at an average public school.”

Though salaries will adjust to rising costs as the inflation tide lifts all boats, they may not rise fast enough to keep pace with college costs, if history is any indicator. CNN graphs out the recent trend below:

The Daily reminds that grants and loans will chip away at the monolithic pricing, but even that assistance may not be enough.

These ever-rising numbers are causing even futurists to pay attention. Eric Garland of the World Future Society sees a future economy cratered by student loan debt. Not so cheerily, he says:

“Barring major legislation freeing people from their student loans, this system of debt will be around for decades, siphoning away $100 – $2000 a month from most every educated American who did not come from the top-tier of the socio-economic ladder.”

Garland wonders if it will not be long before this monthly hemorrhage catches up to businesses, as purchases on iPads and cars and ovens slide downward.

Perhaps, then, with the business community clamoring for their consumers back, those big numbers might, finally, turn in the students’ favor.


Jan 12

Voices From the Field – Kasey O.

My family has a history of debt, bad credit, and being poor.  I did not want to end up like them; I wanted to be successful.   Everyone told me to follow my dreams…and my dreams led me to an Art Institute in Illinois.  (The Art Institutes are owned by EMDC, which Goldman Sach’s owns 41% of.  EDMC is currently being sued for fraud.)  I knew tuition was going to be expensive, but everyone told me that it would be worth it, and to go for it, no matter the cost.  I was told tuition was about $56,000 and that was near the average salary of those in my field.  Good deal, right?  I received as many grants and scholarships as I could, but my loans gained just as much, if not more in interest while I attended school (about $15,000).  I also worked part time the entire time I attended.  I very much regret not being more in tune with my finances, in regard to tuition.  I was under the impression that the first loans I took out were Federal, as Sallie Mae was AI’s “preferred federal lender.”  They ended up being hefty private loans (just figured this out last year).  In total, I ended up borrowing just over $70,000 for tuition, housing, transportation, and supplies.  During my final quarter, AI presented information to upcoming graduates which reported the average salary for my field being $29,000.  That’s no where near $56,000!  Portfolio show is a graduation requirement where professionals in your field come to view your work.  It gets to be pretty expensive to print out your portfolio, purchase business cards, resumes, a website, professional attire, etc.  They urge you to stand out.  Out of the 20+ employers they invited, only two in my field showed up.  One never even made it around to my side of the room.  I was unemployed for over a year after graduating.  I applied everywhere.  It seemed I was not qualified to work in my field, and having a BFA made me look overqualified for regular, Average Joe, jobs.  When I removed my degree from my resume, I was finally able to find a part-time, minimum wage job.

I consider attending AI to be the biggest financial mistake of my life.  It was definitely not worth the lifetime of debt I will face.  Not many of the people I graduated with are working in their field either.  AI boasts high success rates upwards of 80%(there are articles out there about how they cook their books to keep federal funding).  Their actual success rate is probably way less than 25%.  If I had known then, what I know now, I would never have gone to college.  With hard work, and a lot less money, I could have learned what I did at AI on my own.

When I began repayment on my private loans, I asked Sallie Mae how I could lower my payments.  They offered to extend my loan to 25 years, the first two years being interest-only.  I also asked how to get my co-signer released and they told me after two years of on-time payments, I could apply to have them released.  Those two years ended at the end of 2011 and I applied to have my co-signer released. I was denied, because interest-only payments do not count towards the two years of on-time payments.  Had the person I spoke to at Sallie Mae told me the truth, I never would have signed up for that plan!  My co-signer is my father’s ex-girlfriend.  My father’s expected contribution was high, so I did not receive much in financial aid.  He did not actually contribute a dime towards tuition.  He just supplied me with beater vehicles that would break down in rush hour and cost me hundreds of dollars in towing/repairs.  He insisted he would help with payments after I graduated, so between him and my co-signer, who cares about her credit, they help me pay over $360 each month.  I am very grateful.  My Federal loans are currently under the Income Based Repayment plan.  I currently pay $0 a month because I am unemployed after moving to the east coast recently.  In 2036 when my loans are forgiven, I worry about what I will owe as that amount becomes taxable income.

Had I not gotten married last year, I would be living in a run-down, over-crowded trailer with my father, brother, sister and her fiance and two children.  Most importantly, I’d be without health insurance (that’s important for a cancer survivor to have).    My hero of a husband is in the Navy, so I am covered by his insurance.  We will file taxes as married-filing-separately until my loans are paid off because I do not want his income to factor in to what I pay on my federal loans.  I took out these loans before we married, I do not want him to pay.  Combined, we pay more towards our debts monthly than we do for rent and utilities.  We live frugally, paycheck to paycheck.  Aside from a bed, cheap plastic drawers for dressers, and folding card tables for desks, we have no furniture.  Our only car is 17 years old and I do not know we will do when it dies.  I do not save for retirement.  I don’t know if I will ever make enough money to be able to because it will all go towards these horrible loans.  We would love to purchase or build a home, but I doubt we will ever have the money.  We would like to have children, but as things currently stand financially, we just can’t.  I’m 26, so we have a few years.  I figure, I have several options.  1.) Keeping paying for years and years and end up paying over $150,000 (more than double what I originally borrowed).  2.)  Win the lottery.  3.)  Hope the government forgives student loan debt to stimulate the economy!  4.)  Hope for a zombie apocalypse (12/21/12)!

For those currently struggling, if you have not already, get your federal loans under the IBR plan.  It should help to lower your payments!  Hopefully we will get relief from this predatory system soon!  Contact your local congresspeople and keep pressuring them to help make changes to restore consumer protections on these predatory loans.  There are plenty of petitions out there, sign them, share them, keep fighting for change!  Try to stay positive.  This debt does not define you!

-Kasey O.

Jan 12

Tell Us About Your Student Debt Drama

In our “Voices From the Field” section, feel free to share your experiences with student debt, your prospects on the future, and any advice you might have.

If you want to have your story appear on this blog, just send an email to editors@pluckmagazine.com and to help guide your thoughts, feel free to tackle any of the questions below in 300 words or so:

  • What sacrifices have you been forced to make to attend pay for school?
  • Was it worth it?
  • How do you feel about your future?
  • How are you paying off your debt?
  • Any advice for people struggling about with their debt?

Yours in the ranks,

The Pluck Editors

Jan 12

Voices From The Field – Suzanne G.

I grew up in a single-parent, working-class poor family in inner-city WDC to become a first generation high-school and college grad, who spent 15 years paying back the loans for my BA (UMCP, 1968) and first MA (Johns Hopkins, 1969), on my own.

Within a few years of my previously successful, management-consulting firm employer’s going under in the 1990s, I lost my house in a financially disastrous divorce, and had invested my meager pension funds in a return to graduate school for a second M.A. and Ph.D., hoping to better my employment prospects.

During school, I worked steadily in responsible graduate teaching and research positions, but since graduation have been unable to find a full-time job, in or out of my teaching field.  Though there is work, it is all adjunct and part-time — at least for someone my age, now competing with people half my age for full-time teaching jobs.

I am now 65 years old with no pension or benefits, working as a contingent, part-time adjunct university lecturer with no benefits, living on Social Security and part-time adjunct income (under $8K in 2010, under $14K in 2011). Further, as an adjunct, when I am unemployed, i.e., most summers, I am not eligible for unemployment benefits.

My original school loan debt for the second M.A. and Ph.D. was approximately $100,000. I now owe Sallie Mae over $195,000.

Monthly payments on the loans, my only debts, are higher than my income. They are currently in forbearance, and I have just submitted my second Income-Based Repayment plan application.  (The first one was turned down as incomplete, because Sallie Mae sent me an incomplete application packet.) Meanwhile, capitalized interest on these loans keeps rising. The 99% are going under!

Suzanne G.

Jan 12

Voices From The Field – Julie Ann J.

I am a 54 year old woman who has spent my life working in social services, helping families to become self-sufficient under various federal programs. As a single parent in the late 80s, I put myself through school to get my first degree. I did not get consistent child support, so I worked two jobs and utilized the student loan program. When I graduated, I consolidated my loans at 8 percent. I have had some financial ups and downs and periods of unemployment (caring for an aged parent and experiencing some minor health issues) so I have deferred my loans a few times, but never defaulted. I have never earned high wages and for this reason paid minimum payments to ensure that I could provide for myself and my daughter. Sadly, 18 years later, I still owe as much as I borrowed.

I chose the meaningful relevant work helping others over higher earning jobs to stay aligned with my values and to contribute. Part of my lifelong dream was to get a Master’s of Social Work degree, so two years ago at age 52, I took a huge leap of faith to make it happen!  I graduated in June with a 3.94 GPA and am excited for my future and the possibilities to make a difference on a grander scale! As of this date, I am not yet employed but am hopeful that I will find the right fit for my skills and continue to do good work for many years to come! To facilitate this end, I once again borrowed money and increased my student loan debt.

Currently, my biggest fear and point of stress is that I will not be able to pay it off in my lifetime on the wages I will earn. I am fully aware of the programs in place to help me with this, but appeal to our President to consider that due to high interest rates and low wages, many of us will never benefit financially from our hard work as students in pursuit of our dreams. If it were not for the high interest compounding over the years, I may have had this debt paid by now.  As it stands, I fear that the next generation will inherit my debt. At a time when everyone is struggling, I know this is only one piece of the puzzle, but if there is going to be  Student Aid reform, I hope that someone will consider those of us who will never be able to  get ahead of the interest.

Julie Ann J. – Boise, Idaho

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