Des Moines Regiter
09-09-09
Steep student loan debt affects lifestyles, dreams
Some graduates of Iowa colleges delay buying a home or starting a family, or
they forgo work they truly love for a high-paying job that cuts their debt load.
By LISA ROSSI
REGISTER AMES BUREAU
Monticello, Ia. - On a Saturday in August, Brenda Kraus slipped out of her
parents' home, got in her car, and drove down the gravel road.
She wanted out.
"I just left," she said in a whisper. "Because I'm like, 'I need to get out of this
house.' "
She wasn't gone long.
What drove Kraus away was the same thing that brought her back: $60,000 in
college loan debt.
She has an accounting degree from Mount Mercy College in Cedar Rapids, but
she said the size of her debt makes it impossible for her to have a home of her
own.
Kraus, 24, is one of a half-dozen Iowans and former Iowans in their 20s and early
30s who shared the stories of the personal prison college debt has erected
around them with varying degrees of severity.
What difference does it make that typical Iowa college students graduate with
$25,000 to $30,000 in debt?
It affects the lives of those graduates, and officials now realize that the debt load
has spinoff consequences for the communities where those graduates settle.
Interviews with these young, well-educated Iowans and with people who have
followed the college debt trend shows that the burden of that debt forces
graduates to delay when they buy a home. Some find themselves borrowing
more money even in the face of an uncertain future.
The debt pushes some to take jobs that have steady paychecks, rather than fulfill
their passion. It forces others to take job offers with the highest salaries, and if
those jobs are in other states, the graduates become part of Iowa's brain drain.
The debt reduces the amount of cash they have for purchasing cars, furniture
and other consumer goods. The debt causes some to delay having children.
Others opt out of getting an advanced degree. And the debt forces some to work
a second job.
Tahira Hira, an Iowa State University professor of family finance and
consumer economics, said that if the load of student loan debt continues to
grow, communities could be hurt economically in ways similar to what has
happened in the recent subprime housing loan scandal.
Borrowing too much "does ultimately affect the economies," Hira said. "Look
what's happening today in the overextension in the housing market.
"Ultimately, it will crash."
State university grads' debt: About $30,000
College debt is a noose that wasn't as tight for previous generations of college
graduates.
College costs for undergraduates in Iowa have surpassed inflation, increasing
about 200 percent for both private and public schools in the past 20 years,
statistics show.
The Iowa College Student Aid Commission reports that in the 2005-06 academic
year, 9,505 Iowa public and private school graduates, or 66 percent of graduates,
left school with student loan debt.
Nationally, the Project on Student Debt estimates that 62 percent of those
graduating from public institutions carry debt and 74 percent of graduates from
private schools carry debt.
In the 2005-06 academic year, students with debt graduated from Iowa Board of
Regents universities with loans that averaged $29,922, according to the most
recent data. The average debt of those graduating from private colleges in Iowa
was $24,729.
Nationally, graduating seniors held $19,200 in student loans in 2004, more than
double the $9,250 average 10 years earlier, according to the Project on Student
Debt.
"We want to succeed," said Melissa Feilmeier, 27, a high school teacher in
Villisca.
She has $25,000 in student loan debt, in spite of working part-time jobs while in
college to make ends meet.
"I guess I just worked and worked and worked, and just felt I was never getting
anywhere, and to some degree I still feel like that today," she said.
The effects of student loan debt ripple across the state.
- Emily Zach, 28, a government lawyer in Des Moines with more than $100,000
in student loan debt, expects her deferred payment period to end soon. When
she has to begin repaying her loan, the single parent wonders how she will make
ends meet. Payments on her house are already a stretch.
- Ethan Huisman, 32, of Waukee is an optometrist in Clive. He describes his
student loan debt as "well into six figures." His first few years out of optometry
school were spent working for an ophthalmology practice in Cedar Rapids, rather
than starting his own practice - a choice he made for the guaranteed income. But
that decision made it more difficult to build relationships patients and to make a
connection to the community, he said.
- Cheryl Ritz, 28, of Waterloo graduated from the University of Northern Iowa with
$13,000 in college debt. She earns a salary of around $25,000 working for the
Red Cross in Waterloo. She does not own a home, and her student debt could
influence the number of children she someday decides to have, she said.
Big payments become a surprising reality
One message was clear among those with debt: Most did not comprehend that
they would be making large payments upon graduation.
"They don't explain to you in the beginning, 'Oh, you're going to borrow all this
money. Do you realize when you graduate it will be this much every month?' "
said Kraus, the accounting graduate who still lives with her parents.
"Like, I was thinking, 'Oh, $150, $200, whatever," she said. "I had no idea at all,
even being an accountant. I guess you don't think of $400 (a month) for student
loans.
"I think if they would tell you what it cost, it would scare you away," she added.
Roberta Johnson, director of financial aid at Iowa State University, said
students often borrow the maximum amount in loans, a practice financial aid
counselors at ISU have increasingly tried to discourage.
Instead, they ask families to consider what they can pay out of pocket for the
costs of attending college.
"You are borrowing your laundry money, your pizza money, and why would you
want to do that?" she asked.
Educated? Yes. Fully employed? No.
Many young people interviewed said a college diploma is not an automatic
entrance into the economy, a myth people in their 20s said was quashed the first
few years out of school.
"It doesn't prepare you for the real world," Ritz said. "The generation we've grown
up in ... they tell you, 'You can do anything, be anything. The world is yours to go
out and experience after college,' " she said.
"It's a lot more difficult than that."
Johnson, the ISU official, said students must grapple with the mixed message:
College is a time to find yourself. But you must also be careful not to stay in
school too long. You also need to consider the costs vs. benefits of studying
abroad or participating in extracurricular activities, she said.
Young graduates said part of the post-graduation strain is balancing low starting
salaries with high amounts of student loan debt.
Ritz, who graduated from the University of Northern Iowa in 2002, thought she
would have a house after the age of 25. Years of searching for jobs in her field of
public relations against the demands of her student debt have prevented her
from achieving that goal, she said.
Her first job out of school was working for the city of Waterloo, a post she held for
31/2 years.
Ritz had high hopes upon graduating of shaping policy and effecting change, but
this job had her doing more office work than she wanted, she said.
When she was laid off because of budget cuts, she next landed a part-time job at
KWWL-TV in Waterloo. She also took part-time jobs such as waitressing while
she looked for full-time employment, but she was told she was either
overqualified or underqualified for the positions she sought.
"That was a difficult time," said Ritz, who has worked at the Red Cross for about
a month. "Here I had education and experience. I thought I was a well-versed,
mature, responsible adult, and here I couldn't find a job."
Employers, too, are seeing the ripple effects of a new generation deep in college
debt.
New employees saddled with college debt might more aggressively seek raises,
or bounce around the job market in search of higher pay, said Sean Abbas,
president of Iowa Laser Technology, a manufacturing company with about 130
employees in Cedar Falls.
"They think, they went to college, got the degree," Abbas said. "They expect
some return on that investment upon graduation."
Falling behind despite her college degree
Kraus, the Monticello resident, has also experienced the stress of trying to find a
job against the pressures of paying off her student debt.
She said she graduated from Mount Mercy College in December 2005, then
settled into her parents' home in Monticello, at first thinking she would only need
six months to get on her feet.
But finding a job with a good salary in eastern Iowa proved to be difficult, she
said. She applied for bookkeeping jobs and lost out to applicants with no college
degree and 10 years of experience, she said. She did some bookkeeping for her
father's plumbing business before she signed up with an accounting temp agency
in Cedar Rapids.
That agency most recently placed her at the American Red Cross in Cedar
Rapids. She loves her job, she said, but admits the temporary salary, which
brings home about $350 a week, is not enough to help her move out.
She said her loan payments equal $400 each month.
While living at home, she said, she has watched as friends without college
degrees bought homes and got married. She noticed she was going out less.
"I have friends who work in factories and they make $19, $20 an hour," Kraus
said. "They never went to college. They have a nice house. A nice car. And
everything.
"And I'm at home, sitting with $60,000 worth of student loan debt. And they have
no idea, either. Because they've never been through it, they think, oh, I'm living at
home for free - because I want to. And it's not my choice."
The dilemma: Chase dreams or pay bills?
Robert Frederick, director of career services at the University of Northern Iowa,
said high debt loads have led more students to choose a job with a steady
paycheck over a career that fulfills their dreams.
Students who have wanted to be teachers since the second grade have opted
instead for marketing, sales, finance and accounting jobs, which pay better, he
said.
"I'm a romantic in the sense I still believe people can have their calling," he said.
"The reality - I've got $20,000 in debt - is hitting a lot of students."
Recently, Kraus concluded that her $60,000 accounting degree and finance
minor from Mount Mercy College is not adequate enough for her to survive, get a
job and be independent.
She enrolled at Wabash Valley College, a community college in Illinois, and a
school she said is more affordable than Iowa community colleges.
She will be taking online classes in hopes of bettering her chances at passing the
CPA exam, a gateway into what she hopes is a higher-paying job.
But loans offer hope, at least for one grad
Zach, the government attorney, said she actually remains grateful for her student
loan debt.
She graduated from law school at the University of Iowa in 2005 with more than
$100,000 in college loans and landed a job as a lawyer for the Iowa Insurance
Division in Des Moines.
When her son, Luke, was born while she was in college, she said her family
offered her emotional support. But she understood they could not financially
support her college quest.
"Truly, the reason I went to school for so long was to find a job that would be
flexible and work for me and Luke," Zach said. "And it's my student debt that has
let me do that."
Reporter Lisa Rossi can be reached at (515) 232-2383 or lrossi@dmreg.com