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Thinking About Student Loan Debt: Examples From Illinois

June 4, 2008

As someone who has utilized student loans, I’m always interested in stories about how and why others have done the same. What are the circumstances behind their choices? Were the loans necessary? How much debt was accumulated?

With these perennial questions in mind, I read Mary Ann Fergus’s recent Chicago Tribune story with great interest. Titled “More college students paying their own way, experts say,” the article appeared in the May 27 edition of the paper. Below are excerpts from the story interspersed with commentary (bolds mine):

Huyen Le’s father tossed her into the deep end of a swimming pool at age 4 to teach her how to swim. Now Matthew and Elizabeth Le are hoping their daughter’s survival skills will get her through the University of Illinois on her own dime.

ME: It’s a cheap rhetorical introduction, but let’s see how the “deep end” metaphor plays out.

The Barrington [IL] High School senior faces paying about $100,000 for her engineering degree. Her parents say they aren’t willing to go into debt for Huyen or for her three younger siblings. “We believe that unless the kids pay for it out of their own pocket, they’re not going to value it,” said Matthew Le. “They won’t realize what education costs them and they won’t take it seriously.”

ME: Aren’t willing, or can’t? My own parents used a line like Huyen’s father, but my parents couldn’t help. Taking on this attitude is a way to mask inability—and perhaps unjust inequality. It’s a way to put a dignified face on a problem.

Financial planners and college aid directors say the Les are part of a growing number of parents who in recent years have shifted responsibility of paying for college to their children. Stagnant family incomes combined with skyrocketing tuition rates have pushed more parents into taking the sink-or-swim philosophy, experts say.

ME: This would seem to support the can’t angle I outlined above.

The evidence so far is largely anecdotal, but unmistakable, said Eric Weems, director of Loyola University’s office of financial assistance. The number of students paying their way has been going up at the North Side [of Chicago] school, where tuition is $28,000, he said. “I’m hearing from more students than I have in the past,” Weems said. “There are a number of students who say, `I’m basically doing this all myself.’

ME: As an advisor, this corresponds with my ground-level experience.

Students long have paid their way in the past, but experts believe the numbers are growing and that it’s likely more challenging than ever.
In some cases, parents want their children to learn the value of money and responsibility. But many more, according to college financial planners, simply can’t or won’t take on the burden of an undergraduate degree that can cost from roughly $60,000 to $200,000.

ME: I wonder what the debt proportion is per cost of a school’s tuition?

The increased borrowing of unsubsidized federal and private loans over the last decade is one sign that more students are paying all or some of their tuition, said Sandy Baum, senior policy analyst with the College Board. So does the fact that nearly half of all college students now balance a job with schoolwork.
The financial fall-out of the last year means private education loans are harder to get and more expensive for those who qualify.

ME: Since many private loans involve higher interest rates and unfavorable payback conditions, this is probably not a bad development—so long as it is accompanied by a percentage increase in federal loan eligibility.

The Les are among those who don’t qualify for financial aid and don’t have the resources to foot a college bill.
Thanks to income from Matthew Le’s job as a computer engineer and the couple’s frugal lifestyle, they bought an older home in South Barrington a few years ago. Elizabeth Le recently went back to work as an accountant to make ends meet after a 15-year hiatus.
“Our expenses don’t allow us to comfortably send our children to college without putting ourselves in trouble,” Matthew Le said.

ME: I’m not a conservative by any means on student loan eligibility, but whoever said that “comfortably” sending children to college should be a guarantee? In my experience, computer engineers may be overworked, but they’re not generally overpaid. How do the Le parents define “frugal lifestyle?” What does comfortably mean to the Les? There’s a lot of room between comfortably and trouble.

Both parents are immigrants from Vietnam who have seen hard times. Matthew Le said he delivered pizza seven days a week during his last year of college while supporting his wife and infant daughter, Huyen. He left college, he said, with $35,000 in loans that he paid off over 10 years.
“We don’t feel sorry for her,” Le said of his daughter’s pending debt load. Even parents who are paying the cost of college are setting limits, according to financial planners.

ME: I wonder how much the Les Vietnamese cultural differences are behind their particular outlook. Did Mary Ann Fergus think about this? If so, why isn’t some consideration of cultural differences given in the article? When did the Le parents immigrate? Is their parenting style consistent with other Vietnamese parents?

Kelly Rojek, also a Barrington senior, had her heart set on Boston College, even though her parents told her anything over the University of Illinois tuition was her responsibility. For a while, Rojek didn’t believe them.
But during a frank, heated conversation in the kitchen of their South Barrington home, Keith and Liz Rojek reiterated that they would not pay the extra costs. It would have left their youngest daughter roughly $100,000 in debt.
“When it came down to it, it wasn’t worth it for me for undergraduate school,” Kelly Rojek said. “If I end up doing something where I’m not going to be making much money, I wouldn’t want to also have a student loan.”

ME: Why was the conversation “heated?” How does she know what is “worth it?” Why is an 18-year old having to make decisions about the economics of being $100,000 in debt in 4-5 years? The last I checked, we don’t equip high school students with that kind of economic-analytical skill set. Had the family not discussed this all through high school? What did Boston College offer that Illinois couldn’t? Did the Rojeks explore the difference between sticker and actual price (after obligatory scholarships, etc.), a common issue in thinking “private” higher education? (I made ‘private’ a problematic term because so many avenues of public funding help that class schools that the issue can be blurred. It is my contention that the private-public dichotomy is increasing becoming a false one.)

Elgin High School senior Abe Lopez said cost was one factor in choosing Illinois State University over the University of Illinois. Parents Maria and Rudy Lopez both work full time and have a car payment as well as the mortgage on their Elgin home. “We can’t afford to pay for their college,” said Maria Lopez, who noted that she hasn’t had a raise in her state job for five years.
Abe Lopez recently spent 30 minutes on the phone with a bank that approved a $17,600 loan, without a co-signer, to cover his first year at ISU. “It was so surreal,” he said of the call. “That’s a lot of money.”
His older brother, Philip, is also making his way through ISU with loans and part-time jobs. Maria Lopez hopes someday to help her sons make their loan payments but doesn’t believe it’s bad they will have to carry the load themselves. “It gives them the responsibility of being able to make the payments,” Lopez said. “I think it’s good—it’s the only way they’re going to learn.”

ME: This is perhaps a better example than the Les family because there are more details and, I think, a better set of broadly applicable circumstances: mortgage, two-parent income, middle-to-lower income job, a mid-tier state school, no clear parental philosophy of fostering “independence” (parents want to help), etc.

This is a middle to lower-middle class family that is trying to put two children throgh a mid-tier state college, but still potentially going into deep debt. A $17,600 loan for four years is $70,400 in debt for an ISU degree by 2012. Wow. Why not spend $100,00 and obtain your credentials of a major Chicago school (Loyola, DePaul, Northwestern, or the University of Chicago)—or spend what the Rojeks projected and go to Boston College? But that’s a 30 percent increase. What will that increase mean in 2012, after inflation?

And is this really the “only way they’re going to learn?” Does this mean learn at the college level, or learn about managing debt and personal finances? If the former, sure; if the latter, I hope not!

The possible ISU debt-load for the Lopez boy seems like too much to me.

What say you? Are the Lopezes more typical than the Les family? What is a reasonable debt load after obtaining an undergraduate degree? – TL

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  1. In my experience the majority of students pay at least a highly significant portion of “their own way,” through employment and loans. The problem is the stunning cost increases, far in excess of inflation, which stem from American society's increasing disinterest in higher education. (What Americans say is meaningless. What they do is obvious. In almost every state the per capita investment in higher education has dropped when inflation is accounted for. This is topped by the five states – Michigan included – which spend more on prisons than on higher education.)

    As the only “European” nation to bankrupt students in exchange for a degree, as well as the only one where students pick post-secondary institutions based on football teams and dorm design, we have developed bizarre and self-defeating behavior on both sides – the institutions and the consumers. But in a nation with a locked-in caste system – in which, whether you are a politician or a novel writer – a business student or a philosophy major – the name on your diploma means more than the education you received, I understand why students taught to worry about status worry about getting to the “right” campus.


  2. Tim,
    I remember seeing this in the RedEye before I left. I sounds like there wasn't much content difference from the main Trib edition. I was really disappointed by the article. It seemed very misleading to me. I am less interested in people who face potential debt than I am in people who already have debt and they ways they deal with it, i.e. people like myself. I've heard all sorts of nightmares about debts being sold to other creditors (what's the name of the student loan giant? They were a major perpetrator) and having the interest sky-rocket. Something warning about the pitfalls of student loans would be more instructive to those paying them as well as those facing potential loans. I think the Trib missed a much bigger story here.


  3. I have just finished my first year back at teaching regular undergraduate students in about 8 years. Students here are definitely “working their way” through college with multiple jobs and a heavy debt burden. Another thing I've noticed is that students are taking too many classes at once, on top of work, and have a hard time focusing.

    I agree with “narrator” that this is socially self-defeating, especially as we off-shore our manufacturing jobs and expect that all decent work in the future will require a college degree. The cynic in me thinks this system functions to shackle young workers to the millstones of work and consumerist escapism.

    These realities that make union apprenticeship programs looks so much better: combined work and school, high paying job waiting at the end, no debt. But of course, we've also gutted our union sector, so there are precious few opportunities in that regard too.


  4. Ira (aka narrator): My wife and I conversed about the article, and she reminded me of inflation with regard to my own education costs. But my concern is that costs have increased 50-100% even since the early 1990s, which means we (as a society) must think that rate of inflation is acceptable in a 15-year period. How is higher education justifying this? And I agree with your overall assessment of bankrupting students. I have yet to see a lock-down argument in favor of the total shifting of costs onto the student. How does that shift benefit our society? – TL

    Jason (aka Lunchbox): Your point about the article's omission (those dealing with debt) is a good one. I mean, that's the real concern. It's obvious that costs are up, and that students loans are up (whether from parental philosophies of funding or not). So the question is this: What should or can be done to help students whose debts in life are the result of a society that paradoxically demands the bachelor's degree but does comparatively little to help financially in the endeavor? – TL

    Toby: You wrote: “The cynic in me thinks this system functions to shackle young workers to the millstones of work and consumerist escapism.” Student loan holders seem (to me) to be funding middle and upper-class worker's retirement accounts that are comprised of big bank stocks whose dividends are made possible by student loan interest payments. It's an odd, insecure and indirect form of social security.

    On union apprentice programs, I agree. In America on the whole, we need more enlightened, skilled union workers than we need middle-manager/bureaucratic types that are filled by the college-educated who are saddled with student-loan debt, who don't really appreciate the structured higher education they felt obligated to receive. As many past great books promoters have argued, it's the skilled union folks who have more freedom and time to read their interests. And they're not stuck with student loan debt to weigh down their minds. – TL


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