Living, Laughing & Loving… while in debt.
I understand that this headline is a little jarring- but it wasn’t meant for shock value. It demonstrates the sad reality of the financial hardship of higher education and properly illustrates the damaged foundation it’s build on.
There are a lot of variables upon beginning the discussion on higher education, because there are a lot of options after one graduates from school. However, I believe we can all agree that furthering your education – whether that be studying a trade or getting a degree, is essential to surviving outside of the artistic realm, being an entrepreneur or taking over a family business. For those who are unable to pursue the previous three options- you will usually need to be employed by a business. These businesses often don’t even finish looking at your resume if you’ve only obtained a high school education.
When pursuing a degree, there are many options you have. My mistake was choosing to go to a private university, which was something that I didn’t quite understand at 17, but definitely understand now. “According to the College Board, the average cost of tuition and fees for the 2013–2014 school year [is] $30,094 at private colleges, $8,893 for state residents at public colleges, and $22,203 for out-of-state residents attending public universities” (“What’s The Price Tag,” 2014).
Let’s use the figure of $22,203 for example. You apply for a school and get accepted. Hooray! Now, let’s figure out how you are going to afford this! If you are currently living under your parent’s roof, which most teenagers in high school are, they automatically use your parent’s income to determine financial aid. There are two main problems with this. The first is that in under a year you will be 18, so according to the law, your parents no longer have to support you financially. The second is that even if you do have parents that want to foot the bill for your college education, some frankly cannot afford to. For example, when compiling my parent’s information and incomes, they refused to take into consideration steep medical bills my parents were still paying back from my younger brother having cancer. Both of these problems ignore the blatant fact that these students from middle-class families will inevitably be paying their way by use of student loans. In effect, offspring of families that these schools view as middle-class end up being forced to take out debilitating, high-interest private loans to pay full tuition with very little to no federal financial aid. Why? Simply because it looks like on paper that their parents, who are NOT bound by law to support them after the age of 18, could, possibly be able to pay.
Well could and possibly are huge variables when talking about $88,812.
Now let’s look at who isn’t paying $88,812 for the same education:
Teenagers from divorced families (claiming the income of the parent they live with)
Teenagers from one-parent homes
Teenagers from low-income households
These are three of the groups that are given financial aid, federal grants and federal loans to attend college.
In no way am I advocating that teenagers from any of the family types above shouldn’t receive the financial aid that they do- in fact- I think it is great. My main point is that once thrust into the world post college graduation all of these young adults are now on the same playing field in many ways. They have the same education. They have the same opportunities. However, what isn’t the same is their student loan debt.
Here’s a mock case study to further illustrate my point:
A is from a middle-income family whose parents are still together. She chose to go to college at USA University. After considering her parents combined incomes they determine to offer A no financial aid. Therefore, A will be financing $22,203 per year through a private loan from her bank, at a 9 percent interest rate*. Her parents have not offered to help with tuition. When entering the work-force A will have 96,505.08 dollars in student loan debt that she will be solely responsible for.
B is from a middle-income family whose parents are divorced. She chose to go to college at USA University. After considering her mother’s income, they determine to offer B a federal grant of $10,000 per semester and a federal loan for the remainder of her tuition. Therefore, B will be financing $12,203 per year through a federal loan at a 4 percent interest rate*. Her parents have not offered to help with tuition. When entering the work-force B will have 50,764.48 dollars in student loan debt that she will be solely responsible for.
C is from a low-income family. She chose to go to college at USA University. After considering her parent’s income, they determine to offer C a federal grant of $15,000 per semester and a federal loan for the remainder of her tuition. Therefore, C will be financing $7,203 per year through a federal loan at a 4 percent interest rate*. Her parents have not offered to help with tuition. When entering the work-force C will have 29,964.48 dollars in student loan debt that she will be solely responsible for.
*Just for perspective, typical private loans have an interest rate of 8-12 percent, while federal loans have an interest rate of 3-4 percent.
Now, let’s say A, B and C all get $50,000 dollar per year jobs upon college graduation. Student A is clearly starting life out with a major setback and debilitating monthly payments compared to the other two students. And why? Because her parents have a “high enough” combined income that they could be able to pay for her tuition. Oh, and because they’re married.
Therefore, as proud as I am of my parents, and as lucky as I am to have grown up in the situation I was – in the end, it actually ended up setting me back financially, post-graduation.