Graduates Are Buried By Debt ; Average Burden Put at $20,000
By PATRICIA ALEX, STAFF WRITER
It’s no small thing to make it to the top of one of U.S. News and World Reports’ college lists. But the folks at Seton Hall University aren’t exactly celebrating their No. 1 national ranking for student- loan debt.
Sixty-one percent of students graduating from the South Orange campus have to pay back student loans the average totaling $37,724, according to America’s Best Colleges 2008. The numbers are high but they are not an aberration. Nationally, nearly two-thirds of graduates of four-year schools have debt, according to the Project on Student Debt. That debt load averages $20,000.
New federal measures are expected to ease some of the burden going forward. But, for now, student debt which is estimated to have more than doubled in the last decade has a stranglehold on many students and families.
“I’ll be paying it off for at least 10 years,” said Andrea Antwi, who quickly ran up $20,000 in debt during her freshman year at Seton Hall. She ultimately decided on a less-expensive route, attending Essex County College and now Rutgers University, where she is a junior. Still, she will graduate with at least $35,000 in loans to repay.
“When you’re a senior in high school, these kinds of things don’t enter your mind,” said Antwi, who hopes to follow her parents into a career in nursing. “But it’s crazy. It’s depressing.”
Experts warn that the burden is weighing heavily on a generation who may make a host of life-altering decisions such as career choices and homeownership based on a large debt acquired at a young age. They say the debt problem may even be greater than reported since the numbers take into account only specified student loans, excluding other borrowing such as a parent who may have tapped a home equity loan to pay for college.
The averages are bad enough, but the extremes are downright scary. There are stories of students graduating with six-figure debt and looking at payments well into middle age.
Debt numbers for New Jersey students are a bit above the national average and, paradoxically, students at some of the state’s most expensive schools have the least debt. That’s because schools such as Princeton and Drew universities, which cost more than $40,000 for students who live on campus, have large endowments that allow the institutions to supplement tuition for middle-class and lower- income students.
Princeton, for instance, has an endowment approaching a staggering $15 billion. Princeton students, on average, graduate with the lowest debt load in the nation, according to the U.S. News survey. About 26 percent of Princeton graduates carry student-loan debt, averaging $4,965.
Tom White, a spokesman for Seton Hall, said the university and other Catholic schools don’t have a history of amassing large endowments.
“Fund-raising for scholarships is newer to Catholic schools – we never saw ourselves as a charity,” White said. “The debt load is high, we can’t dispute that.” But he said efforts are under way to address the issue. “We’re just finishing a $150 million fund-raiser and $24 million will be endowed for scholarships.”
Tuition at Seton Hall is more than $27,000 and living expenses add $10,000 to the tab. Part of the cost issue has to do with being located in an expensive part of the country, said White.
“We’re not making excuses, just trying to put it in context,” he added.
Another area school, New York University, comes in a close second on the U.S. News list, with 61 percent of graduates carrying debt, averaging $34,417.
Monmouth University in West Long Branch is not on the national list but, in fact, has one of the highest rates of student debt in the state, averaging just over $33,000, according to the debt project. Just over three-quarters of students there graduate with debt. Tuition at the school is $22,400 a year.
Graduates from one of the state’s least expensive schools, New Jersey City University, have some of the highest debt loads – an average of just over $26,000, according to the debt project – since the school serves more low-income students who may have to borrow more to get through school.
Advocates are hoping the new federal college cost reduction act will help rein in indebtedness. Interest rates on federally subsidized student loans will be cut in half over the next four years and opportunities are available for loan forgiveness for those who go into some public service jobs under the new legislation. There also will be a cap on the percentage of yearly income dedicated to federal loan repayments and grants to low-income students will be increased.
Congressional leaders have hailed the bill as the single biggest investment in making higher education affordable since the G.I. Bill in 1944.
In New Jersey, the measures generate an increase of more than $549 million for college students in the next five years, according to federal estimates.
“It’s a significant step forward,” said Robert Shireman, executive director of the student debt project, which is funded, in part, by the Pew Charitable Trusts. “Today a growing number of borrowers are in peril and this creates a safety net to make sure we’re not continuing that.”
Nine of 10 student loans are from government sources. Private student loans have come under even more scrutiny as part of a push to clean up the industry and its cozy relationships with some colleges.
Rep. Steve Rothman, D-Fair Lawn, voted for the cost-reduction bill and said even more needs to be done. “We know that much more help is needed for working- and middle-class families,” he said. “This needs to be a national priority.”
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(SIDEBARS)
Help on the way
* Nearly two-thirds of graduates of four-year colleges and universities are carrying student loan debt, averaging $20,000.
* Some help is on the way. New federal legislation will cut the interest rate on need-based subsidized Stafford loans from 6.8 percent to 3.4 percent by 2012. Most recipients of those loans have family incomes of $50,000 or less but some families making up to $100,000 would qualify. The change will help working class families and it is hoped an increase in federal grants will ease the burden on lower-income students.
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Disparities in debt load
High tuition and little aid result in high debt for graduates of some colleges while students at other schools graduate relatively debt-free. A list of the colleges where graduates leave with the most and the least student loan debt.
Most debt
School % of grads with debt Average amount of debt
Seton Hall University 61% $37,724
New York University 61% $34,417
Worcester Polytechnic Institute (Mass.) 83% $34,409
University of North Dakota 72% $33,032
Pace University (N.Y.) 72% . $32,980
Least debt
School % of grads with debt Average amount of debt
Princeton University 26% $4,965
California Institute of Technology 34% $5,156
Harvard University (Mass.) 42% $9,717
Howard University (D.C.) 88% $10,868
Utah State University 25% $11,040
Source: U.S. News and World Report
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Case study
Andrea Antwi, 20, went into so much debt her freshman year that she left Seton Hall University and went to a community college for two years. She is now a junior at Rutgers University in Newark.
Work: In addition to going to Rutgers, Antwi works more than 25 hours a week at two part-time jobs: a work study office assignment on campus and as a weekend receptionist at a rehabilitation care center.
Aspirations: Hopes to be a nurse, like her parents.
Education loans: NJ Class and unsubsidized Stafford Loan.
Debt: About $35,000, including $20,000 for her freshman year at Seton Hall University. Loan repayments begin six months after graduation.
Quote: “Right now I’m handling everything but I’m afraid of graduating and having to pay it all back.”
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E-mail: alex@northjersey.com
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(c) 2007 Record, The; Bergen County, N.J.. Provided by ProQuest Information and Learning. All rights Reserved.