Debt for Life?

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As student loan debt rises above $1 trillion, what is a degree worth?

College pays. This much we’ve been told. College graduates earn $1 million more over their lifetime than those with a high school diploma.

But how does a student foot the ever-increasing bill? Tuition for the 2013-14 school year at Saint Louis University is $36,090, not to mention the nearly $10,000 it costs to live in Griesedieck Hall and the host of other costs including books and fees. In the United States, the average private, four-year institution’s tuition is $30,090. For the majority of students, financing this increasingly means taking out loans and accumulating debt. With SLU’s “sticker price” easily topping $47,000, loans often become a necessity.

For Derrick Neuner, who graduated from SLU in 2013 with a Master’s in Athletic Training, it meant accumulating more than $100,000 in debt during his six years.

“What I did not expect was the longevity of it all. I know it’s not true, but I almost felt like I had nothing. Going through that summer job search, I was wondering ‘what is the point of this, why did I rack up all this debt?’” Neuner said.

After receiving a six-month grace period to begin payment on his student loans, Neuner made his first payment in November. Now an athletic trainer for a high school in Huntsville, Ala., Neuner makes about $29,000 a year before taxes.

Neuner is far from alone. Sixty-three percent of SLU students graduated with debt in 2011, holding an average debt of $36,601. Nationally, student loan debt has increased from $260 billion in 2004 to just over $1 trillion now.

Another 2013 graduate, Mike Hogan, was able to graduate from SLU with considerably less debt.

“I’ve been very fortunate. I recognize that…I worked hard in college and I was able to leverage my SLU education to get into a great graduate school where I have incurred a ton of debt,” Hogan said, who is now in his first year at Yale Law School.

“There are definitely concerns about the overall debt level, but there are also some things being taken out of context… we have very little flexibility to decrease what a student decides to borrow,” Cari Wickliffe, SLU’s Assistant Vice President and Director of Financial Services, said. “Not all families have been able to save for college, but we still want to provide that education…sometimes that means borrowing.”

Neuner was one of these students.

“I knew what going to SLU would mean, financially. I knew neither of my parents had the financial flexibility to help much,” he said.

SLU’s tuition has increased by 63 percent the last ten years, from $22,050 during the 2003-04 school year. The list of culprits contributing to these precipitous raises runs long: from ballooning administrations to expensive capital projects, but can be summed up with a fundamental economic dynamic. Demand simply cannot be satiated, and a seemingly endless supply of easy-to-acquire loans has made college accessible to an increasing number of students. With these funds, schools have engaged in a sort of arms race to attract new students and garner more prestige.

“Making loans so available and flexible, we’ve taken out some of those checks and balances to remind students that this is a loan and these are the consequences of it,” Wickliffe said.

While students are legally allowed to borrow up to the full cost of tuition, it’s best to exhaust all options before making such a commitment.

SLU touts the statistic that 95 percent of its incoming students receive financial aid, including grants, loans and work-study, with an average award of $24,900.

But, a college degree is now viewed as essential to securing a stable, middle-class job, leaving many students with few options but to bet on their future income; the unemployment rate for high school graduates is more than twice that of college graduates. “To have a middle class job, you need to have a bachelor’s degree…but there’s a little price to pay, and it’s student loans,” Neuner said.

“There are pressures building from government and accrediting agencies as well as from families on institutions with regard to affordability and accountability,” Dr. Heather Bednarek, the chair of SLU’s economics department, said. With these pressures, SLU has upped its efforts to help incoming students understand the full cost of a degree.

“[Debt] almost seems like a problem you deal with after the fact. They’ve gotten a bit better, but it still needs work,” Neuner said.

“We can always improve on communicating a complex situation and making it more simple,” Wickliffe said.

The office of financial services aims to engage students early and often, offering one-on-one sessions at SLU 101 and holding exit counseling for those who graduate with debt.

“We can’t cure every situation, but if a family is having a change financially and we know about it early on there is a lot more we can do,” Wickliffe said.

So what does the future hold for student loans? Besides more borrowing, there will be a continued demand for increased transparency and alternative payback plans. Especially for students who go into lower-paying professions, there are increasingly ways to lessen the debt burden.

“There are government programs that provide debt or partial debt forgiveness for professions that are in shortage in rural or other low-income areas,” Bednarek said. Because Neuner works as a health professional at a public school, his loans will be forgiven after ten years, as long as he stays current on his payments.

In the end, neither Neuner nor Hogan has any regrets about attending SLU.

“SLU was definitely worth it for me. I grew tremendously and met some of my best friends. How could I put a price tag on that?” Hogan said.

“Nothing about SLU would make me change my mind, other than the cost,” Neuner said.

It seems, for now, college still pays.