Cecilia Devine, 21, is a senior education major at the University of Memphis. When she is not on campus, she is working to pay for her current expenses, such as housing, car and phone. For college students, like Devine, a degree is a ticket to a financially stable world.
Devine knows that it is much more complicated than that.
“When I graduate from college, I hope that I will find a job right away,” Devine said. “But I know that it is very hard to find a job in today’s world.”
Devine is not alone. By 2015, 43.3 million Americans had amassed more than $1 trillion in student loan debt.
Student loan balances are rising faster than any other category of debt, according to estimates from the Federal Reserve Bank of New York.
Couple that with the rate of rising tuition costs and a tough job market for recent graduates, and students are left wondering if it is even worth it to go to college.
Wages have risen just 1.6 percent for college graduates over the last 25 years, after adjusting for inflation, according to the Federal Reserve Bank of New York. However, student debt burdens for college graduates have increased about 163.8 percent.
With the unemployment rate at 7.2 percent (compared with 5.5 percent in 2007) for young college graduates, those statistics do not bode well for students like Devine.
Devine, who works as a teaching assistant, said she hopes her experience will help her find a job.
“However, I know I haven’t paid a dime in college expenses and that I am going to be burdened by a ton of debt the minute I step out into the real world,” she said.
Mark Kantrowitz, publisher and vice president of strategy for Cappex.com, is a nationally recognized figure in student financial aid. In 1994, Kantrowitz founded a popular website on the subject and published a book about scholarships for math and science students in 1993.
“My focus is on all aspects of planning and paying for college, not just student loans,” Kantrowitz said in an e-mail interview.
However, he knows that, at the rate outstanding student loan debt is rising, it’ll reach $2 trillion by 2022.
The only way to stop the rise, according to Kantrowitz, is for the federal and state governments to spend more on support of postsecondary education.
“Families and colleges do not have the resources to make college affordable,” he said. “An extra $50 to $75 billion a year in Federal Pell Grants would lead to hundreds of thousands of more low- and moderate-income students graduating from college each year.”
The extra investment in grants would likely pay for itself through increased federal income tax revenues since college graduates pay more than double the income tax of high school graduates, on average.
“Investing in higher education is not just an investment in the student’s future, but an investment in our nation’s future,” Kantrowitz said.
Duke Stephens, 48, graduated from Furman University in 1989 with a degree in history. He found a job right out of school and, soon after, started a family.
“Most people go to school thinking they are going to make a name for themselves,” Stephens said. “But most people struggle searching for jobs right off the bat, and it keeps you from moving forward.”
Stephens, who lives in Atlanta and works as a real estate agent, spent the next 10 years paying an amount that exceeded $14,400.
Stephens was most stressed regarding payments after he married at the age of 27 because his wife had to incur his debt.
“Not only does the amount of debt affect yourself but it also affects those closest to you,” Stephens said.
In 1989, 9 percent of the nation’s households owed student debt. According to data on PewResearchCenter, that number is now nearly one out of five, or 19 percent. What is more significant is the rise from the 15 percent that owed such debt in 2007.
Stephens knows these facts. He hopes that his son, who is in high school, makes the right choice when picking a school and borrowing money from financial aid.
“I don’t regret the life I had and the friends I made, but I would never take on that debt ever again,” he said. “I would make different choices to reduce the amount of debt I owed. I hope my son chooses to do the same.”
Nicholas Cedotal lays in his bedroom in Collierville with his laptop on his desk and papers spread out across his bed. His phone lights up every 30 seconds with text messages and Snapchats from his friends. This is his usual spot when he comes home. A place where he can relax after a long day at school and soccer practice and dream of graduating.
Cedotal, 17, is a senior at Collierville High School who can think of nothing else but college.
“I can’t wait for the freedom to be able to make my own decisions,” he said.
He has applied to nearly every college in the state of Tennessee and several other major universities in the Southeast. There aren’t any preferences when it comes to choosing a school, except for community college.
The average annual cost at a two-year college is $2,963, according to CollegeBoard, and most community college course credits transfer successfully to a four-year college.
With the average annual cost at a four-year university at $9,410 for in-state and $23,890 for out-of-state, students can cut their incurred debt nearly in half.
However, for high school students, like Cedotal, the appeal of a four-year school is much greater than that of a community college.
“No offense to the smaller schools,” Cedotal said. “But I want to go to a big school and get the full college experience.”
Ginger Shepherd is an accounts manager at Allen, Summers, Simpson, Lillie and Gresham, LLC. She got her business degree from Northwest Community College in Mississippi. Shepherd, who has a daughter that graduated nursing school in May and a son currently at the University of Memphis, said students don’t need to go to a big school to get a good education.
“I know a lot of people harp on community colleges but I couldn’t afford the four-year schools after I graduated high school,” Shepherd said. “I got my degree and entered the working world right away, and yet I didn’t have to pay anything regarding student debt.”
Grace Chiocco, 45, knows how expensive college can be. She amassed 150 hours of course credits at two separate universities. She studied abroad in Spain for a semester. She spent a few semesters taking online courses while raising children.
Chiocco was one of the lucky ones to find a job straight out of college, and was able to pay down her debt in no time.
However, she has a daughter who is about to graduate from college and a son who graduates from high school in May.
According to a study conducted by Greg Gordon and Aarond Hedlund, tuition costs have gone up 87 percent between 1987 and 2010, and that the increase in tuition is related to the increase in borrowers.
The results of the study are comparable to the Bennett Hypothesis, published in 1987 by then-Secretary of Education Bill Bennett, which states that “increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase.”
“I try to help my kids out as much as I can with college costs,” Chiocco said. “But those costs have risen since I was in school. I’ve done everything I can to teach them what I know.”
While several students and college graduates are stressed about student debt, Kantrowitz says there is no need for any alarm bells yet. Average debt at graduation for a Bachelor’s degree ($37,000) is less than the average starting salary ($50,000).
“(It) is not yet a national crisis, since only about one in six undergraduate students are graduating with excessive student loan debt, and that is mostly a matter of choice, not necessity,” he said. “So long as total student loan debt at graduation is less than annual income, the student can afford to repay his or her student loans in 10 years or less.”
Instead, it is more of a college completion problem. Students who drop out of college are four times more likely to default on their student loans and represent almost two-thirds of the defaults.
However, Kantrowitz said that if current borrowing trends continue, a crisis will develop “within the next two to three decades.” For now, the best thing for students to do is to keep working.
“Get a job, any job, even if it means bagging groceries or waiting on tables,” he said. “Some income is better than no income, and it is easier to get a job if you already have a job.”