College dreams turn into debt nightmare

In Student Loans Weighing Down a Generation With Heavy Debt, the New York Times introduces yet another debt-doomed borrower: Kelsey Griffith, 23, borrowed $120,000 to earn a marketing degree from Ohio Northern University. She’s working two restaurant jobs and will move in with her parents while looking for a marketing job.



Ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education — up from 45 percent in 1993, according to a Times analysis of Department of Education data. This includes federal and private loans.

Elite colleges with big endowments can offer generous financial aid — and a degree that’s valuable in the labor market. Ohio Northern charges $50,000 a year for a degree of moderate economic value. “Pursue your dreams” is a cruel hoax being played on 18-year-olds and their financially naive parents.

Only 38 percent of payments on federal student loans are being paid, down from 46 percent five years ago, the Times reports. Some borrowers are still in school. Others have deferred payments. Some have defaulted.

Forty percent of recent college graduates have delayed a major purchase, such as buying a car or a home, because of college debt, estimates a Rutgers study.  Only half of the surveyed graduates had a full-time job.

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  1. Interesting story that I still don’t think entirely captures the situation. (As noted in the recent discussions here of college loans, I’m the parent of an Oberlin junior and an incoming Oberlin freshman; we get significant financial aid, and after negotiations, receive enough that that doesn’t include loans. If that changes, our kids are changing schools; they are not graduating in debt.)

    There’s a tier of elite colleges that offer their own financial aid structure. Family incomes below a set amount get a grant for full tuition; below a lower set amount, they get a grant for full tuition, room and board. Harvard led the way with that; other Ivies followed suit; Stanford has the same setup. So those students are not graduating in debt. It would be naive to believe that that structure didn’t reduce the chances of a non-wealthy applicant of being admitted to those schools, though.

    Oberlin’s initial financial aid offers to my kids included $4,000-$5,000 a year each in Stafford and Perkins loans. That was before we negotiated enough more that the loans weren’t necessary. The original offer would have meant graduating with more modest debt than many students, which is still unacceptable to our family. But apparently there’s a tier of colleges — more legit schools than the predatory for-profits like Kaplan — that are letting their students’ debt balloon out of control.

    One surreal thing about the college application process is that the full sticker price of elite colleges deters many non-wealthy students from applying, since they’re unaware that they have a decent chance of getting enough in grants to swing it. Oberlin costs our family less than a UC would.

    The general public discussion and the press deserve some blame for the fact that “financial aid” is routinely discussed as though grants and loans were on equal footing. It’s easy to get lulled into not noting that the relatively modest amount offered in Stafford and Perkins loans adds up after four years.

    • Roger Sweeny says:

      Ohio Northern is not “predatory”–if predatory requires some nefarious intent. They are something perhaps more dangerous, an organization so full of themselves that they actually think they are doing students a favor by taking $200,000 of their money and putting them $120,000 in debt.

      At least with Kaplan, you know they are trying to make money off you. Ohio Northern, and all the other non-profits, pretend not to.

  2. Going to university can definitely be expensive and it can suck if you aren’t able to find a job on the way out, but “No one told me that” isn’t really a valid excuse. I’m not sure whether Kelsey Griffith was using that as an excuse, but it wouldn’t be legitimate to do so. It doesn’t matter whether its related to your dream. You still need to do the financial calculations and they can be done ahead of time.

    Generally, universities disclose the estimated cost of attending. Further, you will also receive an award letter prior to attending which tells you how much you can expect to receive in Pell Grants, un/subsidized loans, and in my case, Cal Grants. So yea, unfortunately, the debt that she will be paying off is merely a result of a lack of foresight. She probably not alone though. I wouldn’t be surprised if there were several students in her same position.

    I will have to pay off my loans soon, but I’m lucky that I won’t have to pay off $900 per month. I’ll only need to pay $120 per month. And then, I have the APLE Grant to look forward to. Thank god…

  3. Richard Aubrey says:

    I recently semi-retired from sales, after almost forty years. The idea that you need a four-year degree to do this is puzzling.
    What you need is to be able to communicate, to be able to do a moderate amount of math–rising from time to time to basic algebra–be reasonably extroverted, be a self-starter, be competent at written communications.
    I was in the life insurance business and the companies train the new agents, expecting them to get further learning (LUTC, CLU) on your own, although they may spot you some money.
    Business communication: Use standard English, remember that a surprising number of people don’t get metaphor.
    Advertising: Unless you are running your own shop, there’s an advertising department and they know more than you do, even it it’s obvious they don’t.
    You might get some experience being a people person if you go to college, more likely if you go away to college. But you mayalso get that by becoming mature.
    Jeez. Four years….
    II guess it’s credentialing. “I’m trainable.” Perhaps there’s no other way to show it in the current environment.

  4. Totally ridiculous, we live in what’s supposed to be the greatest country in the world and most kids can’t afford to go to college without racking up a crushing debt.

    As always, follow the money back to the a-holes in charge and you will find budget cuts, just-in-time new banks specializing in student loan and predatory for profit colleges that make it look like its all soooooo easy

    • Stacy in NJ says:

      This is just nonsense: “Totally ridiculous, we live in what’s supposed to be the greatest country in the world and most kids can’t afford to go to college without racking up a crushing debt.”

      Most students have affordable alternatives at community colleges with transfers to state colleges, but many choose to attend expensive mediocre schools and incur the debt. Choices have consequences.

  5. Roger Sweeny says:

    It’s comforting to think that most of the problems in the world are caused by for-profit corporations–because then they could be solved by limiting or abolishing them.

    Alas, the world is not nearly so simple. My son used to complain that the president of his not-for-profit university had a salary of more than a million dollars (plus house plus various other perks). But she was a great fund raiser. She made the school back many times that. Colleges are businesses. They produce a product which they sell. They hire people to produce that product and to do sales promotion and to influence the government. That doesn’t change just because there is no profit line on their financial statements.

    I think we need to be radical in the original meaning of radical–going to the root. The problem is that nowadays young people need a college degree just to start out in so many jobs, even though those jobs make no use of what was in that person’s coursework. It is as ridiculous as requiring people to have attended four years of residential basketball camp. Sure, many would take away useful things–teamwork, the importance of practice, etc.–but lots of people wouldn’t have much aptitude or desire. They would spend most of their time doing what so many college students do today, hanging out, partying, a part-time job, whatever.