A tale of two students
December 6, 2011
By Natalie Posgate
The game is changing in the college world. On one side, the demand for skilled labor is increasing, which necessitates a college diploma to strive in the workforce. On the other side, tuition is increasing, which makes it harder for students to pay for their education. The result? Students have to take out more loans, and are often prisoners to their lenders many years after they graduate.
In fact, it takes most students at least 10 years to pay off their loans after they graduate, according to Marcia Miller, the associate director for financial aid compliance and reporting at SMU. “Once you get past $20,000 in debt, it takes longer,” Miller said.
This fact isn’t promising, considering that last year two-thirds of all graduating seniors nationwide took out student loans to pay for tuition and carried an average of $25,250 in debt.
While these numbers will most likely increase, they aren’t causing students to back down from acquiring higher education. Two students tell their tales and why the loans are worth it in the end.
Profile No. 1: Cody Permenter
“My family is kind of lower socioeconomic status so they don’t really help me out with anything,” he said.
Permenter takes out subsidized federal loans – both Stafford loans and Perkins loans – so all are under his name.
Permenter, currently a junior, said that so far he has borrowed $18,000 for his college expenses, but he didn’t think much of his debt until one of his friends asked him for advice on taking out loans.
“I feel as if I don’t really have a grasp on paying them back,” he said. “It’s actually been pretty scary coming in having one year left.”
Permenter expects to owe around $24,000 by the time he graduates. He is glad that since his loans are subsidized, they do not accumulate interest while he’s in school and he has several months after graduation before he has to begin paying them back.
During his first two years, Permenter, a digital journalism major, worked a part-time job on campus at the KLRU station – Austin’s local PBS channel – to keep up with his expenses. He is interested in pursuing politics after he graduates, so he is currently working an unpaid internship at the Texas state capitol.
“It’s been a lot harder paying for things without a [paid] job,” he said. “It puts a strain on students having to take out so many loans and maybe not do things like extracurricular activities or an internship. But I think it’s a necessary thing I have to do. In this day and age you have to have a college degree to be successful.”
Permenter said that his plan to tackle his debt is to get in the workforce and try to pay off his loans as soon as possible when he graduates. His advice to other students who have to take out loans is to “get the most out of your education so that you have the tools and then your children won’t have to take out loans. My ultimate goal is to have stability for the future family that I have… that my children won’t have to take out loans and worry about college.”
Profile No. 2: Benjamin Klingler
Benjamin Klingler’s decision to attend private school instead of public school caused him to take out loans from day one. A senior at SMU, Klingler takes out unsubsidized federal loans and some private loans to pay for his tuition. While his parents pay for a portion of his tuition (without loans), Klingler pays for most of it, which he said is difficult since tuition is constantly increasing.
“There are a lot of things broken with the education system and paying for it is one of them,” Klingler said in an e-mail. “It is no surprise students are taking out more money for school when SMU’s tuition/fees alone have gone from $33,170 for the 2008-2009 year to $39,430 for the 2011-2012 year. That is a $6,260 difference and does not even include room and board.”
Because his loans are unsubsidized, they started accumulating interest at a 6.8 percent rate when Klingler began college. Since tuition has increased every year, Klingler occasionally has turned to private loans, since his unsubsidized loans only allow him to take out around $7,500 per year. He has already paid off some of the interest, but he said that it is hard to keep up with the monthly payments the more loans he takes out.
“It is somewhat of a terrifying gamble paying for private school with loans, especially with the current state of the job market,” Klingler said.
To keep up with all his expenses, Klingler has worked part-time jobs on campus since day one of freshman year. He has also kept a very tight budget and used money-saving solutions.
“Instead of going to the movies, where tickets cost $10, or paying for cable, I use Netflix,” Klingler said. “Instead of eating out for lunch, I bring a sandwich and chips to school. Instead of purchasing drinks every day, I bring a water bottle to refill. It’s the small things that really add up quickly that most people do not realize.”
Klingler is majoring in computer science, and will begin working on his master’s degree in interactive technology at the Guildhall at SMU-in-Plano. Klingler estimates that after he completes graduate school, he will be somewhere between $90,000 and $100,000 in debt for loans, give or take a couple thousand dollars. While initially these numbers almost scared him off from finishing his degree at SMU, he realized that he could pay off his debt smoothly with a disciplined plan.
“After staring at that colossal number for a few weeks and drawing out very rough drafts of my future budget for the next couple of years, I then realized how easy it was going to be for me to pay this off,” Klingler said. “Sure, I could pay the minimum payment on these loans for who knows how long, but due to interest, that would mean I would ultimately pay way more than I need to over a much longer period of time… Fortunately, the career path that I plan to go into after graduate school is video game programming. Starting salaries for such a position are on an average around $75,000. If I am making that much a year and I continue to live as I do now as a college student, I can easily pay off all of that debt within three or four years of graduating.”
Klingler knows that his future salary will help pay off his debt sooner, but he is not planning on letting his salary tempt him into irresponsible spending.
“The goal that I have for myself is to pay these loans off as quickly as possible and then afterward continue to live a minimal spending lifestyle,” he said. “At the very least, if I must borrow at some other point in time, I would like to have a clean slate. I will not have my own house for some time and will not be driving a fancy car to work, but it is a decision that I am absolutely comfortable with, especially if it means becoming debt-free and independent.”