Top Dollar Degrees: How to Avoid the Debt Dilemma
Rising costs, crushing debt, and students and families struggling to adapt. As the higher education landscape continues to change by the day, how are you supposed to get the most bang for your buck?
5 EYEWITNESS NEWS spent months searching for the answer to that question to help families master the system, in part one of our series, "Top Dollar Degrees: How To Pay for College without Breaking the Bank."
It's a topic millions of Americans are struggling with - debilitating student loan debt. No matter how much you have, you can't get rid of it, even if you declare bankruptcy. So what do students and parents need to do to steer clear of the debt dilemma?
"The student loans - going to school has definitely changed my life, and has ruined my life," said Kevin, a college graduate in crisis.
"Very upsetting, frustrating, angry," Kevin said.
He borrowed money to attend two Twin Cities universities, and graduated with a degree in information technology and graphic design in 2007. His first job - a project connected to the housing market - disappeared when the economic crisis hit.
That's also when his bills began to build up.
"Anywhere between $1,600 to $2,200 a month," Kevin said.
He couldn't find new work in his field, and fell way behind on those loan payments. Now, the 32-year-old is buried in debt.
"It's probably amassed pretty close to $250,000," Kevin said.
That's about $120,000 in student loan debt, plus years of interest and legal fees related to three lawsuits from lenders.
"My life is ruined," Kevin said. "I won't be able to probably own a house. I won't be able to buy another car, probably not get married, have kids."
Kevin's experience is extreme, but our research shows it's also troublingly typical.
A report released last year by The Institute For College Access & Success found Minnesota's class of 2011 graduated with the third-highest average debt load in the country - nearly $30,000.
Federal data shows Minnesotans are better at paying it off. Still, state officials voiced concern in a report on student debt released in May, writing, "Students are increasingly relying on loans for financial aid. Loans are increasing at a faster pace than federal, state and institutional grants as a form of student financial aid."
"I just look at this process and go, 'We've got to do something to correct this.' We cannot continue on accumulating the debt that's being accumulated," said Jerry Myers, owner of Minnesota College Funding Strategies in Inver Grove Heights.
He said the families he helps are overwhelmed, and that very few are fully financially prepared for what's about to happen.
"They really don't have an understanding of what it's going to take because costs have been going up so dramatically," Myers said.
Myers said families are waiting far too long to tackle the college cost calculus, and relying on loans far too often. He said parents need to sit down with their kids as early as junior high to start fleshing out the finances.
"If the parents can have the conversation that, 'This is our budget. This is what we are going to be comfortably able to afford to have you attend college, and this is the dollar amount,' then what's going to happen is that student's not going to take a look at a $50,000 college when the budget can only be $25,000," Myers said.
"They might just be hoping that everything's going to work out. It's got to be more than that," said Tom Tillberry, who has been a counselor at Roseville Area High School for 18 years.
He sums up his new age college philosophy in three words.
"Dream with reality," Tillberry said.
He said more, and earlier, emphasis needs to be put on career paths. That way, picking a school is a matter of pairing a college with a career, with cost playing a role throughout the process.
"Going to a four-year college should not just be pre-assumed that that's the place for you, especially if the career that you've chosen doesn't necessarily have to go that route," Tillberry said.
Kevin said he could have pursued his dreams without a degree. Instead, he's making $11 an hour, and filed for bankruptcy in August.
When asked what he would have done differently, Kevin replied, "I would not have gone to school."
A good rule of thumb is to not take out more student loan debt than what you expect your annual salary to be your first year out of college. So if you think you'll make $35,000 the year after you graduate, don't take out more than $35,000 in loans. And public loans will almost always be safer bets than private loans.
In most cases, private colleges do mean higher debt loads, but not by much. According to the Minnesota Private College Council, in Minnesota, students who attend private colleges graduate with an average of just $2,000-$3,000 more debt than those that attend public universities.