’07 Grads Get Record Debt With Diplomas

By Bill Graves and ShelWood, The Oregonian, Portland, Ore.

Jun. 10–The 18,000 students earning degrees from Oregon’s public universities next weekend face a future clouded by record debt.

Two-thirds of the class of 2007 will leave school in the red, with debt averaging about $19,000. Some students owe so much that they won’t be able to take the jobs they want, or they’ll put off going to graduate school. Most are resigned to tough years ahead as they dig out of debt while trying to launch careers.

Oregon public university students, who carry the eighth-highest average debt in the nation, go deep in the red because tuition is high and state aid is low compared with other states. The average Oregon family must devote a large chunk of income — 36 percent, after financial aid — to cover costs at a public university, according to the National Center for Public Policy and Higher Education.

During the five years that most members of the class of 2007 needed to work their way through college, they watched annual tuition and fees climb 21 percent — from an average of $4,148 to $5,031. The increases forced students to borrow more.

Darren Boerl, 21, who’ll graduate Saturday from Portland State University with a degree in criminology, worked summers plus 25 hours or more a week during school. Even so, he racked up $35,000 in debt. He has applied to become a Portland police officer and says it could take him 10 years to pay off his debt, although he hopes to do it in five. “It weighs on me,” he says. “There is no way you can’t think about that every day.”

Precise debt figures for the class of 2007 aren’t available. But university officials expect student debt to reach as high as or higher than it did last year, when students graduated with average debt ranging from $17,629 at Portland State University to $23,703 at Oregon Institute of Technology.

Those who graduate from OIT and Southern Oregon University carry the most debt. That’s partly because those schools have smaller endowments and therefore less financial aid to give away, compared with PSU, Oregon State and the University of Oregon — so students borrow more.

Though job prospects are as good as they’ve been in years, graduates can expect to earn about the same as their parents did when they left college. Yet today’s grads also face higher costs for housing, health care, energy and other needs. Median salaries for workers ages 25 to 34 with bachelor’s degrees have remained flat, after adjusting for inflation, over the past three decades, climbing modestly for women and declining slightly for men.

Nationally, employers expect to hire nearly 20 percent more new college graduates this year than last year, according to the National Association of Colleges and Employers.

Oregon hiring is up as well, especially for business, accounting and computer science majors, says Deb Chereck, career center director at the University of Oregon. But she sees much of the job growth in lower-wage service positions, such as call center operators. “That doesn’t necessarily pay off student debt very quickly when you’re working for 9 or 10 dollars an hour,” she says.

In such an environment, “You are no longer thinking about ‘What can I do?’ You are thinking about ‘How do I pay back these loans?’ ” says Melissa Unger, executive director of the Oregon Student Association, a coalition of student governments representing public college students.

The association reported this year that its survey of 4,300 students turned up many who are postponing graduate school because of debt.

More than half of 1,280 graduates in a 2002 national survey sponsored by Nellie Mae Corp., a student loan provider, said loans weighed down their lives, forcing them to change career plans or to delay milestones such as moving out of their parents’ homes, getting married or having children.

Diertra Lynn, 26, is graduating from UO and aspires to law school. But as a single mother of a 6-year-old son who’s $50,000 in debt, she instead is looking for work at a bank so she can keep up with living expenses and start to pay down her debt. “I have learned a lot being in college,” she says, “but when I look at it moneywise, it’s not worth $50,000.”

Students actually benefit from some debt, says David McDonald, admissions dean at Western Oregon University, because it gives them “a deeper level of commitment to their education.” Students with $2,000 to $3,000 in debt per year graduate at higher rates with better grades than students who avoid debt or, alternately, sink deep in the red, he says.

The most vulnerable are low-income students with debt — particularly those from families earning slightly too much to qualify for need-based grants, McDonald says. They are more likely to work long hours, take fewer classes and stretch college to five years or more — or drop out, he says.

Javier Torres, 24, of Portland would graduate this year if he were able to stay on a traditional four-year path. But he’s still enrolled at Mt. Hood Community College and doesn’t expect to complete his bachelor’s degree before his 30th birthday. He lives at home, works nights as a high school janitor, attends college part time — and is $7,000 in debt. “I’m running on three hours of sleep a night,” he says. “It hurts. I should be done with my bachelor’s by now.”

Forty years ago, an Oregon student could work part time year-round and emerge from college debt-free. But paying as you go has become much harder.

Today, 88 percent of students work, according to an Oregon University System survey of the class of 2005. Of those surveyed, 14 percent worked full time, 58 percent part time and 16 percent only during breaks. Many students work 30 hours or more a week, leaving less time for classes and study and prolonging their time in school.

This year may be the high-water mark for student debt in Oregon, at least for a while.

Congress is working to lower interest rates on student loans and steer more money into grant programs. In Oregon, the Legislature is considering Gov. Ted Kulongoski’s proposals to limit tuition increases to growth in median family income. Lawmakers appear likely to support his plan to plow $46 million more into the state’s student financial aid program, bringing the total for 2007-09 to $107 million.

Most young people will be better off going into debt for a degree than not going to college at all, says Tamara Draut, author of a recent book, “Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead.”

A college degree is critical, Draut says, not because those with a degree earn more than previous generations — they don’t — but because those without one earn so much less.

Marian Lucas, 22, already sees the payoff. She chose debt over work so she could immerse herself in campus life at Western Oregon University. She will graduate owing about $20,000.

But she completed her studies in just over four years, earned a 3.9 grade-point average and a degree in education and landed a job teaching first grade this fall. She has advanced from summer retail jobs at Washington Square Mall to a $32,000-a-year job at Washington Elementary School in Salem.

“Now I’m going to make more,” she says. “I’m working with people who believe in what they are doing, and doing a job that is going to make a difference.”

By Bill Graves and Shel Wood

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Copyright (c) 2007, The Oregonian, Portland, Ore.

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