Final Project

(Yobucko.com-Student Loan Debt Statistics)

Before I was in college, the term “student loan debt” meant very little to me. When I heard those words, I used to think of Harvard or becoming a lawyer or a doctor.  I only associated debt with going to extremely expensive schools, and it never occurred to me that most students (in this day and age) graduate with a significant amount of debt. One of the factors that influence a student’s debt level is interest rates on their loans. Interest rates vary depending on the type of loan a student takes out. This infographic demonstrates most of the loan types that are made available to students.

(American Student Assistance)

While student loan debt is a serious crisis that affects the entire country, it differs from section to section of the United States. This information, which I received from a blog titled “Tuition.IO- Student Loans Made Simple, depicts the average debt that a student will be in depending on where they live. As seen in this infographic, the east cost contains more private universities, and private universities are more expensive. Ivy League universities, such as Harvard, Princeton and Yale are located on the east coast. The west coast possesses more public universities, which are less expensive than private institutions, so students who attend universities on the west coast generally have lower amounts of debt.

While the amount of debt among students differs across the country, it also varies from within the state. If you look at this graphic, you’ll see the majority of public universities in the state of Illinois, the graduation rate of the university, and the total percentage of students at that university that has student loans. In some schools, such as Northern Illinois, Southern Illinois at Carbondale, Western Illinois and Eastern Illinois, the percentage of students with student loans is higher than the total graduation rate of the university. Personally, this never occurred to me as a possibility, and this statistic saddened me. It saddened me because it made me realize that, for some students, even with student loans, college still isn’t affordable. In my opinion, education is a right, not a privilege. Nobody should be denied the right to go to college just because you can’t afford it.

Illinois Comparative

Also in this graphic, you can see that in all of these schools, the percentage of students with student loans is higher than 50%. This displays that most students in this country couldn’t afford college without the help of financial aid.

(Yobucko.com-Student Loan Debt Statistics)

In finance, a “default” occurs when a debtor fails to pay a debt that he or she has been required to pay. In the case of student loans, a default rate occurs when a person who has taken out student loans is unable to pay them back. In this infographic exhibits the default rates on student loans and their various types. I was surprised to learn that the national average was 8.8%. This means that 8.8% of Americans don’t pay back their student loans. If almost 10% of borrowers can’t repay their debt, then I believe that something within our government has to change.

(Tuition IO-Student Loans Made Simple)

Something that has recently been in the news is HR 1716, which is the proposed legislation that would change all student loan repayments for new graduates into Income-Based Repayment (IBR). This means that, no matter what you owe, you would never receive a loan payment you couldn’t afford since the payments would be based off of your income. While, on the outside, this looks great, it isn’t. The plan eliminates the forgiveness option that is currently associated with IBR, so while the payments may be lower, they could last permanently. This means that federal government would profit greatly from this.

(http://www.usatoday.com/story/news/nation/2013/11/25/federal-student-loan-profit/3696009/)

 

This graphic demonstrates just how much Congress profits from student loans.  Last year, Congress made $41.3 billion on student loans. This is enough money to provide maximum-level Pell Grants of $5,645 to 7.3 million college students. So, why didn’t they? If the government doesn’t have students’ best interests, why should we trust them with our finances?

Reflection Video

Feature Story: Ashley Johnson

Ashley Johnson’s world revolves around fashion: From the outfit she picks out to wear each morning, to the creations she designs for her fashion merchandising classes, Johnson definitely has a passion for fashion.  However, the fashion industry was not Johnson’s first choice career-wise.  In fact, neither was attending Eastern Illinois University.

 While applying to colleges in 2011, Johnson, a sophomore fashion merchandising major with a minor in textile design, did not put Eastern Illinois University at the top of her list. Johnson, a Smithton, Illinois native, originally wanted to attend Bradley University. “Eastern was not my first choice in going away to college,” Johnson stated. “It was Bradley University, because I wanted to be a nurse and I know that they have a great nursing program. I decided to come to Eastern because I thought that it would be more affordable for my parents, and more affordable for me out of college when I have to pay off student loans, as well.”

 

When asked if student loans were the main reason for her change of direction, Johnson said that it was. Johnson stated that the ultimate reason for her decision to come to Eastern was so that her parents wouldn’t have to take out as much money as they would have if she had chosen Bradley.

 

“With loans, and interest, I didn’t want to be in a lot of debt when I graduated. I wanted to at least have a good start paying off my loans.” Johnson’s decision to come to Eastern also affected her choice of major, as well. “At first when I came, I was a nursing major, but then I realized that Eastern didn’t have that strong of a nursing program. Fashion merchandising was always another option for me. I love fashion.”

 

Overall, Johnson said she is happy with where she is in her major. “ A part of me wishes that I could have gone to Bradley and studied nursing, because nursing is a very rewarding profession. I would have been doing something that benefits a number of people. But it wasn’t until I changed my major that I realized my deep love of fashion.” 

 

Links

“Student loans” is such general term. Student loans is not just a singular issue; what many people do not realize is that there are many types of student loans. Often times, the type of loan that a student uses affects how and when the student will be able to pay them off. This article gives a great description about the types of student loan options that are available to students, as well as the requirements that is needed for each loan type. I believe that this article is a great starting block for any student that wants to educate themselves on the basic principles of student loans. 

In his article for The Huffington Post that was published last week, Shahien Nasiripour gave insight to the severity of the student loan debt crisis. Since student loan debt is centered around, naturally, college students, most people believe that therefore it affects only them. These people are incorrect. Student loan debt affects the entire economy. According to the article, the federal government made tens of billions of dollars off of it’s student lending operation. Nasiripour goes into further detail about the immorality of the government making profit off of students. This is a fantastic article in terms that it depicts the severity of the student loan debt crisis. 

Time Magazine has also recognized that student loan debt is hurtful and detrimental to the economy. In his article for Time, Dan Kadlec compares the student loan debt crisis to the mortgage crisis. While Kadlec writes that the mortgage crisis is on the mend, the student loan crisis is dragging the economy back down. Not only this, but he relates the two crises. This article is intriguing in the sense that it shows how two un-seemingly unrelated issues have the ability to affect not only students, but everyone else.

The Seattle Times recently profiled a young married couple as they strive to live in today’s economy. Both are in their early 30s, and both are continuing to pay off their student loans. This article is a great example of the hard work, determination and patience it takes to pay off student loans. I also believe that many students think of paying off their loans as a far-away, abstract concept: Part of this feeling comes from being young, and most of it comes from inexperience. This couple realized that their spending habits were inhibiting their ability to pay off their loans, and together they made the decision to work together. This article personalizes and humanizes debt. 

Who do Americans want to look to for reassurance in a crisis? The President. With his calm demeanor and inspiring speeches, President Obama is likely to give at least some students the reassurance they need. In August, the president released a new plan that will allegedly reduce student loan debt for loan borrowers. In times of crisis, having the leader of our country enact a plan to help those in need gives (at least) a small sense of comfort and eases the feeling of helplessness that some students may have. 

 

The Senior Experience-Tania Vuscko

Eastern Illinois University student Tania Vuscko shares her personal experience with student loans.

My first post is representative of what I want to accomplish with this blog. With this post, I chose three words that I want capture and frame. Framing is an idea or central storyline that organizes and provides meaning. It is a process in which certain facts, themes, treatments and words are selected to frame a story to maximize interest and understanding.

 

 

Awareness:

When most Americans hear the word “debt,” student loan is typically not the first type of debt that comes to mind. Many upcoming graduates are unaware of the student loan debt crisis that this country is facing. In his article for Forbes, Chris Denhart states that student loan debt accounts for 6% of the overall national debt. In 2013, the amount of student loan debt surpassed the amount of credit card debt. In this blog, I want to give college students the understanding of the severity of the debt situation. Every student that is able to attend college because of financial aid deserves to know the situation they’re going to be thrown in to when they graduate.

 

Knowledge:  

I come from a single parent household; I could not attend college if I did not take out student loans. As I stated in my first post, I believe that education is a right, not a privilege. As I realize that soon I’m going to have to start paying off my loans, I began to think about the cost of college. I want to provide other college students with the answers to the questions I have myself: why are loans so high? Why is college so expensive? Where does the money go?

 

Security:

College graduation should be a joyous time in a student’s life: their hard work over the past four (or more) years is over, they successfully completed their education and they are ready to begin a new chapter in their lives. Typically, when a student does graduate, they do so with an overwhelming sense of uncertainty: the uncertainty of finding a job, the possibility of working at a job that doesn’t relate to their field and that they don’t enjoy doing and the doubt of never paying off their student loans and always living under a cloud of debt. Through this blog, I want to provide students with a sense of security and confidence. While student loan debt is hugely daunting, it is manageable. They worked hard to get where they are, and they deserve to feel proud about it. 

 

I think that this image is very powerful and speaks directly to my topic. Here are students at their graduation ceremony, and they are already aware of the debt that is literally stacked against them. As I realize that I will be graduating in the next eight months, reality is starting to sink in for me. I understand that I will be paying off my loans in less than a year. From now until I graduate, I want to be as fully prepared as I could possibly be in the knowledge of student loans, and in the process, never lose hope that I won’t be buried under a pile of debt for the rest of my life. 

Indebted Introduction

Post 1

For this project, I have decided on the topic of economic security; more specifically, student loan debt. I firmly believe that education is a right, not a privilege, and that money should not be the only reason why an American citizen cannot attend college. I chose this topic because it is extremely relevant to my life. I will be graduating in the spring, and will soon have to pay off my student loans, as will many of my classmates here at Eastern. The more I thought about my student loans, the more I realized that I knew absolutely nothing about them. I started asking myself questions: Why are loans so high? Why is college so expensive? Where does the money go? Is there a difference between public and private universities? I hope, through this blog, to not only educate fellow students but also myself on the answers to these questions.

The goal of my blog is to give upcoming graduates the basic knowledge of student loans. I do not think that many students understand the severity of the student loan debt crisis. I believe that students should be aware of the situation they’re going to be thrown in to in the upcoming months. As for the messages I want to emphasize,  I want to address all of the questions in the above paragraph: why are loans so high…etc.

Student loan debt has been an increasing issue in this country, and as a result it has been widely reported in the news. In his article, David Luzer (2013) dives into the difference between student loans at public universities and private ones. He gives examples of real students who are $120,000 and $90,000 in debt. “How did this happen, why did colleges let these students make such dumb financial decisions?” he asks. In her article for the Huffington Post, Amanda Fairbanks (2011) describes in detail the lengths that some graduates have to go to to pay off their staggering debt. In her article for the Boston Globe, Gail Waterhouse (2013) states how most students are taking jobs unrelated to their field of study in order to start paying back their loans.

Perhaps one of the most newsworthy stories of student loan debt comes from one very important person: President Obama.  In August, President Obama announced a new plan to lower higher education costs. In his plan, Obama proposed a ratings system to assess how hard colleges are working to keep down costs. Federal aid would be based on the school’s ratings that would require approval from Congress. The plan calls on colleges to disburse student aid over the course of a semester, rather than as a lump sum at the start. Colleges would receive bonus money for the number of Pell Grant students who graduate. As for the ever-growing levels of student debt, the plan calls for expansion of a “Pay As You Earn” program that would cap loan repayments at 10% of income. The plan also says that colleges should offer a greater range of “affordable, high-quality options” that will generate competition with other colleges and drive down prices.

  Reference List

• Fairbanks, A. (2011, April 26). Newly Graduated and Drowning in 6 Figures of Student Loan Debt. The Huffington Post. Retrieved September 13, 2013, from http://www.huffingtonpost.com/2011/04/26/college-graduates-debt_n_854047.html
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Luzer, D. (2013, August 26). Student Loan Debt: Focus on Public Colleges. Washington Monthly, 10. Retrieved September 13, 2013, from http://www.washingtonmonthly.com/college_guide/blog/student_loan_debt_focus_on_pub.php?page=all
• Waterhouse, G. (2013, August 25). A Higher Degree of Debt ; Thousands of Recent College Graduates with Loans to Pay off Are Putting Their Plans for Better Lives on Hold. The Boston Globe. Retrieved September 13, 2013, from http://www.highbeam.com/doc/1P2-35049909.html?refid=bibme_hf