Student debt escalates due to loans
Economic bailout package will benefit student-loan companies, Treasury Secretary says
Nick Perry
Issue date: 10/13/08 Section: Money/Health
SEATTLE (MCT) - Tyson Hunter dresses sharply, works out most every day and can't wait to make his mark on the business world.
Hunter, 23, also happens to owe $152,000 in student loans, accumulated in four years at Boston University. He graduated last year with a bachelor's degree in business administration, and now earns $40,000 a year at a market-research company.
His loan payments soon will top $1,000 a month - the amount of a small mortgage, and about a third of his salary. If he makes the minimum payments, he will retire his student debt when he is 53 years old, having handed lenders some $300,000.
"Buying a house? That's not even in the 10-year goals," says Hunter, who has temporarily moved back into his mom's Bothell, Wash., condo to reduce expenses. "The next two years are going to be crippling. Hopefully, after that, it won't be as crippling."
At a time when deep uncertainty permeates the economy, graduates across the country are entering the workplace with staggering liabilities. The average student debt has doubled since the mid-1990s.
And that burden often has an effect on the most fundamental choices graduates are making about their lives - decisions about home, family and career.
Take Isiah Sandlin, 32, and Hollie Sexton, 26, who are studying medicine at the University of Washington. Sandlin already has $275,000 in student loans; Sexton, $100,000. When the couple graduates in two years' time, they expect their combined student loans will top a half-million dollars.
Each new loan helps cover the payments on the previous ones. At least one of them will likely need to work in a high-paying specialty to make the whole thing fly. Sexton's dream of volunteering abroad seems a long way off.
"I couldn't quit now if I wanted to. No way," Sexton says. "Once you are on the train, you've got to keep going."
While Hunter and Sandlin have exceptionally large loans, more than two-thirds of all students now borrow money to finance their education, up from less than half in 1993. Among undergrads who borrow, the average finished school in 2004 with loans of $19,000, up from $9,000 a decade earlier, according to one analysis of federal data.
Hunter, 23, also happens to owe $152,000 in student loans, accumulated in four years at Boston University. He graduated last year with a bachelor's degree in business administration, and now earns $40,000 a year at a market-research company.
His loan payments soon will top $1,000 a month - the amount of a small mortgage, and about a third of his salary. If he makes the minimum payments, he will retire his student debt when he is 53 years old, having handed lenders some $300,000.
"Buying a house? That's not even in the 10-year goals," says Hunter, who has temporarily moved back into his mom's Bothell, Wash., condo to reduce expenses. "The next two years are going to be crippling. Hopefully, after that, it won't be as crippling."
At a time when deep uncertainty permeates the economy, graduates across the country are entering the workplace with staggering liabilities. The average student debt has doubled since the mid-1990s.
And that burden often has an effect on the most fundamental choices graduates are making about their lives - decisions about home, family and career.
Take Isiah Sandlin, 32, and Hollie Sexton, 26, who are studying medicine at the University of Washington. Sandlin already has $275,000 in student loans; Sexton, $100,000. When the couple graduates in two years' time, they expect their combined student loans will top a half-million dollars.
Each new loan helps cover the payments on the previous ones. At least one of them will likely need to work in a high-paying specialty to make the whole thing fly. Sexton's dream of volunteering abroad seems a long way off.
"I couldn't quit now if I wanted to. No way," Sexton says. "Once you are on the train, you've got to keep going."
While Hunter and Sandlin have exceptionally large loans, more than two-thirds of all students now borrow money to finance their education, up from less than half in 1993. Among undergrads who borrow, the average finished school in 2004 with loans of $19,000, up from $9,000 a decade earlier, according to one analysis of federal data.
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