For Students: Beware Student Loans

Our Corrupted Education Costs
by Pia Jensen

As an undergraduate student I worked part-time, applied for federal and state aid, spent a little time on preparing scholarship applications, and took out subsidized and unsubsidized loans. I work full-time now, attend school part-time, apply for the same aid packages, and still have to take out loans to afford school and ensure payment of bills. Between work and school, I have little time to spend on applying for scholarships, yet I continue to with little result. The number of scholarship applicants is huge and competition is tough. This story is the story of millions of other college students across the United States. My situation is unique in only one respect. I am an older, returning student whose life experience includes disability and a number of low paying, non-career track jobs due to lack of a degree. At least I have real work skills.

I am about to complete my first degree and will continue with a masters in Communications. I have a lot of catching up to do. If I stop at the BA, I’ll still be far behind most people my age in preparing for retirement. Feeling responsible for my undergraduate loans, I pay attention to the current balance and try to figure out when I can actually start paying it back. In the meantime, the interest accrues and my debt grows vast, it is far more than I actually borrowed at this point. Believe me, I tried to afford to begin paying, but what can a person do on a disability check, or on a minimum wage job? Survive. That’s all. And the loan debt grows, for all students. When we graduate, we will have debt burdens far greater than our parents who went to college. We will also have far more competition in the workforce than our parents did. And the cost of living is far greater now; inflation has outpaced income.

So what does a student in debt do? Fortunately for me, hard work and perseverance has paid of and I will begin a new job which pays more and I can begin to pay off the interest. That feels pretty good until I look at the fact that my undergraduate loan is maxed out. I’ll be paying off the interest for a very long time. If I do well in my new job, I can look forward to new employment opportunities that will more than double my income. That will be four to five years down the road. In the meantime, I keep receiving letters from loan companies inviting me to consolidate my loans. I did that once and it increased my debt burden. Those offers go in the round file and I wonder if I will ever know how they got my address. I thought that was supposed to be confidential information between myself and the originating loan company.

The first time I chose to consolidate, I thought it seemed like a good idea. I was wrong and I see the err of my choice now. I would have been better off without the consolidation. When I seek information online, since I can’t believe the letters that flood my mailbox, I begin to feel numb.

I don’t trust most of the websites, because they want me to consolidate my loans with them. There must be at least a couple hundred websites offering students a way to better manage their student loans. But, where is the government oversight? How can I trust that any of these companies are legitimate when most have somehow already breached confidence by getting my postal address and sent me consolidation offers? Legislators have become aware of consolidation issues and unfair lending practices. I read this past year that Congress was looking into unscrupulous practices that leave students with unbelievable debt burdens. Will it really make a difference?

Will the federal government enact more laws to protect students, when laws already exist regarding lending practices? We already know that loan companies are breaking the law by culling confidential information. Will they really change their ways? Will the federal government find a way to provide relief for students whose twelve thousand dollar loans ballooned to thirty thousand dollar loans due to consolidation and interest accrual?

The future may not be so difficult for me, as an older student with well-developed skills and workplace experience, but what will happen to those students whose skills are not well-developed and who don’t have much workplace experience upon graduation? What sort of debt burden is going to plague the future of our youth? It is not uncommon to see news stories about students at the age of 19 looking at a debt of $150,000 for an education that will hopefully land them a job which will provide great financial rewards. Many students will graduate with their first degree carrying a debt load $40,000. Interest rates are no longer fixed at 5% and students are prey to loan companies which care not one iota about that student’s future. Bankruptcy is not an option. Federal grants have not kept up with inflation. Housing costs soar. Fuel costs are soaring, and probably won’t come back down. What can we do, besides cringe every time we view our loan statements?

We can write our legislators and hope that some relief will come of the investigations into unfair lending practices. We need effective help from our representatives if we hope to make a better life for ourselves after graduation. Students have a tough financial time while in college; their reward upon graduation should be the ability to afford life. I am thankful that our government has instituted employment opportunities which allow students options to pay back their loans through work with the government. Perhaps that concept can be used in the private sector as well, by offering companies tax relief by hiring students with debt burdens due to student loans.

Otherwise, how can we possibly hope to crawl out from these outrageous debts?

Write your Congressional representative today: www.house.gov/writerep/