Trapped by Huge Debts, Facing a Rotten Job Market, Students Who Made a Were Stupid Investment Bear the Consequences.
April 22, 2009
This New York Times article deals with bright students who believed nonsense and will pay for their foolishness for years, maybe decades. Here is reality:
Gregory Westby, a 27-year-old designer who graduated from the School of Visual Arts in New York last May, is caught in the student loan trap. He has $150,000 in debt. He hasn't been able to find a full-time job in graphic or set design, but is using his earnings from low-paying freelance jobs and working weekends at a fitness club to pay his rent. And he's in the process of deferring his loans, which, together, cost $1,500 a month."Right now I'm surviving, but who knows when I'll be able to start paying my loans back?" he said.
While Mr. Westby has found a temporary solution, many others are in default. The most recent default rate on federal loans was 6.9 percent, the highest rate since 1998, according to preliminary data from the Education Department. But this statistic illustrates only a piece of the picture. It tracks only the students who started to repay their loans between October 2006 and Sept. 30, 2007, but who had defaulted by September 2008. And it doesn't include loans in deferment or forbearance even though those borrowers are unable to make payments. Nor does it include loans not backed by the government.
Perhaps seduced by the idea of graduating from a well-respected university, many students tend to overlook the consequences of graduating with debts that are likely to far exceed their starting salaries. And as many borrowers have learned, student loans are among the most ironclad debts, on par with child support, alimony and overdue taxes. They stick with you no matter what.
None of this was necessary. Students were not told by their counselors that there are ways around this. I explain it here: