Written by Heather McGinley —
[dropcap]After years of frugal living and months of earching for the perfect home with her new spouse and stepson, 32-year-old Tommy Gaskins nearly lost the contract on her home when her college debt was factored into the equation.[/dropcap]Gaskins accumulated thousands in debt through a failed attempt at completing college, but finally went back and earned an associate degree through an online university and a bachelor’s degree through a combination of online and on-campus courses. She began making payments in 2000 after her first attempt at completing college. Except for a six-month period when she was laid off, she has been consistently paying down her debt since 2009 when she graduated with her bachelor’s degree from Strayer University.
“The sad part is that my house that I just bought—I closed on it in March—will be paid for before my student loans,” Gaskins explains. “It’s super depressing.”
With more than $54,000 left to pay back, Gaskins has placed attending graduate school on hold until she can pay down more of her debt. And according to several recent polls and studies, she is not alone.
Recently graduated with an associate degree from ITT Tech, 25-year-old Derrick Hernandez has yet to begin paying his student loans. However, heeding the advice of friends, he is budgeting and putting money aside each month to meet the anticipated high costs of loan payments.
After a series of conversations with his supervisors, Hernandez believed that upon graduation his employer would promote him to a higher paying position. He reasoned that he would have little difficulty paying back his debt. Three months after graduation, no positions in his field have been advertised and his supervisors are no longer discussing opportunities for advancement.
Hopes of purchasing a home or a second vehicle for his family within the next few years now seem unrealistic. Hernandez has begun to worry how college loan debt will affect his family of four and their future. Although the specific circumstances of these graduates may not reflect those of the majority, deviation from previously established stage of life trends in recent graduates may potentially affect the economy as graduates and their families spend less money than previous generations.
Pew Research studies indicate that while the birthrate has declined since the recession began in 2007, the number of births to college-educated women is on the rise. However, so are the ages at which they are giving birth. Graduates explain they want to pay down debt before starting a family. A 2012 Rutgers University study, “Chasing the American Dream: Recent College Graduates and the Great Recession” shows that 14 percent of college graduates are putting off marriage and other committed relationships because of college debt. Forty percent of graduates explain that student debt prevents them from investing in major purchases, despite low housing market costs and interest rates. One-third of 2009 to 2011 graduates reveal that they are residing with family or parents or are otherwise getting help with housing. And 51 percent of graduates are receiving some form of financial assistance to pay their bills. While researchers study the patterns of recent graduates on a national level, a college planning coach and representatives from universities across Hampton Roads report similar trends and offer advice to decrease the burden of student debt.
Trends in Hampton Roads Graduates and Students
There is some increase in the number of recent grads who are unemployed, but more often, there is increase in the number of graduates who are underemployed based on their levels of education, explains Tom Wunderlich, Old Dominion University’s executive director of the Career Management Center. More alumni are holding on to “lifeboat” jobs they had in college to supplement lower than expected income or income from multiple part-time jobs, Wunderlich says.
More graduates have returned to college to pursue higher degrees or degrees in other fields, and more are accepting jobs unrelated to their majors, explains Nash Montgomery, Norfolk State University’s director of Career Services.
Both directors have observed an increase in the number of grads requesting resume and career help and using online career database resources.
Circumstances for students have changed, too.
Representatives from Christopher Newport University (CNU) and NSU report an increase in the number of students applying for financial aid. “The amount of financial aid we do—especially federal and private loans and federal and state grants—has increased about $2 million every year since 2007-2008, underscoring that families need assistance in meeting the financial costs of college,” explains Clara Johnson, director of financial aid at CNU.
CNU has seen an increase in the number of families applying for additional aid through professional judgment because of job loss or sequestration. “For a lot of families, this means that funds that were previously earmarked to help pay for college now have to pay for household expenses, and there’s a greater reliance on any type of financial assistance,” Johnson says.
Even at the community college level, where students tend to pay less per credit hour, over half of Tidewater Community College (TCC) students receive scholarships and/or other types of financial aid, explains college spokesperson Marian Anderfuren. There has been an increase in the number of Pell Grant eligible students nationally entering universities, explains Ellen Neufeldt, vice president for student engagement and enrollment services at ODU. These grants are traditionally awarded to students with great financial need.
“As colleges and universities increase their costs of attendance, students need to borrow more money or look for resources to help pay for the increase in costs,” explains Melissa Barnes, associate director of financial aid at NSU.
Plan Ahead to Minimize Costs and Decrease Debts
“It’s not the same as it was 20 or 30 years ago,” explains Luanne Lee, certified college planner and owner of Your College Planning Coach. “Costs have increased so much that there’s no way the average or even above average income person can save enough to totally pay for an education.” You have to go to college with a plan, she says. Tidy up your financial house and clean up spending before applying for financial aid, Lee says. College planners, who are financial planners by trade, can help with this.
College planners advise students and parents of available saving options and programs. Save in places where there are guarantees rather than in those subject to market volatility, so the money will be there, Lee advises. College planners utilize interest and personality inventories and more to help students determine their desired career path so they can select the right major at the school of best fit academically and financially. Students who recognize their interests and what is required to arrive at a particular career minimize costs, she adds.
“We have to be wise consumers and realize that education is a purchase,” she says. “We have to look at it just the same way that we look at purchasing a car. We look for the discount, we haggle a bit, we try to negotiate—you should be doing the same thing with education and the schools that our children attend.”
Options that save money are not always obvious. In some cases, students who fit particular criteria find greater savings attending a private college that offers merit scholarships that meet the student’s needs, Lee says. Students can save $50,000 to $70,000 in overall attendance costs by attending community college the first two years of school.
“TCC, like other Virginia community colleges, has guaranteed transfer agreements with four-year schools including Virginia Tech, University of Virginia, Old Dominion University, Norfolk State University and many others,” Anderfuren adds. “If a student completes the required courses and maintains the required GPA, they will be admitted.”
[quote]Costs have increased so much that there’s no way the average or even above average income person can save enough to totally pay for an education[/quote]
When it comes to financial aid, do not rely solely on what schools offer based on the FAFSA reading, Barnes advises. Research scholarships, loans and alternative means of financing education and be mindful of scholarship types, deadlines and requirements. Begin researching scholarship options several years prior to senior year, Lee says. Some scholarships require volunteer hours and reaching specific milestones before senior year or even high school. Consider a payment or installment plan that allows you to pay out of pocket while in school, and continue to seek scholarships in college, Johnson advises. “Scholarship searching is hard work, but it can often pay huge dividends.”
Borrow only what you need for school and not the maximum allowable for your academic classification, Barnes says.
Working on campus 15 hours a week can be a good option to pay down college loans for full-time students, but be mindful of the time you will need to be successful, Neufeldt explains. ODU has a Center for Major Exploration dedicated to helping students plan a major and map out appropriate coursework for each semester. Seek similar resources as a freshman. Plan each semester factoring in credit hours and the amount of time needed to study for each course.
Tips for Graduates
“Student loan debt is like many other debts and in life we are going to have things like mortgages and car payments. Student loan debt is a piece of that,” Neufeldt says. “Make sure you work with the loan companies to have a manageable payment plan that shows good progress on the loan, but also allows you to make good progress in life.”
Gain a firm understanding of financial literacy and budget management to formulate a plan, she advises. Meet with a financial planner who can help create a budget and determine options for paying down debt while saving for retirement and other investments. Explore loan repayment plans, loan forgiveness, loan cancellation and discharge guidelines available on the FAFSA website. More detailed descriptions of specific loan repayment plans and parameters exist on lending agency websites.
Use free career counseling services, online job databases with regional and national listings, and job fairs available to graduates and students at most universities. “We can’t all start exactly where we thought we might, but that’s been the truth as long as students have gone to college,” Neufeldt explains. “A college degree regardless of the field of study is still the best opportunity for employment as well as advancement over time.”