Thinking critically about your student loan burden

by Grace

Maureen O’Brien took on student loans totaling $54,000 to help pay for her daughter’s first two years of attendance at an out-of-state university costing more than $49,000 each year.  She had told her daughter to “dream big” and to look beyond lower-cost state schools.

After realizing that in-state tuition is much more affordable, O’Brien’s daughter later transferred to Arizona State University where her brother will start as a freshman this fall.  The family expects to take on loans totaling $70,000 to pay for the children’s college.

In addition to the liability for her children’s student debt, O’Brien is paying on her own $60,000 student loan she took out in 2004 for retraining as a physician assistant.  She also has a small balance from her first college loan from 1996.  More than one-third of her take-home pay is going toward paying student loans.

She has no savings, no money put away for retirement and is thinking of taking on a second job to pay off her kids’ loans.

O’Brien believes college taught her critical thinking.

Despite her family’s growing student loan debt, O’Brien still believes in the value of a college education. She says it was her first degree — in French and international studies — that taught her how to think critically. And she wants the same for her kids.

On the subject of her kids, here is O’Brien’s daughter.

She says she’s determined to finish her degree in environmental studies.

“I can’t afford to go to college, but I’m taking out loans, I’m putting my foot forward and making sure I get an education so that I can get a really good job in the long run,” Emily says.

Environmental studies  –  I’m highly suspicious of the value of these types of interdisciplinary majors since I’m not sure they lead to good jobs.  A degree in environmental science would probably be better.  But that would be a harder course of study, with more rigorous requirements in math and science courses.

Related:  How’s that urban studies degree working out for you? (Cost of College)

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9 Responses to “Thinking critically about your student loan burden”

  1. “O’Brien believes college taught her critical thinking.”

    Maybe not–or at least not her initial BA. I think it was probably her daughter’s $49k a year out-of-state public college that finally taught O’Brien critical thinking.

    At least O’Brien makes real money and the kids are finally in state schools. 50ish is awfully late to be figuring out the birds-and-bees of personal finance, though.

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  2. “Steven Maack, an English teacher at East High in Wichita, Kan., says he feels the same way. He and his wife make $110,000 a year. Ever since their daughter, Eden Maack, was born, they’ve been saving for college with help from grandparents. They’ve saved $16,000 so far — but that will soon disappear.”

    “”In order to get her through the first year, we’ll have to spend all the money we’ve saved,” Steven Maack says. “It’s conceivable for years two, three or four we’ll have to borrow quite a significant amount.””

    “Beloit costs about $46,000 per year for both in-state and out-of-state students. Eden earned a $20,000 presidential scholarship and grants from the school, which will cover about half the cost each year, but her family will still have to take out more than $5,000 in loans to pay for her first year of college.”

    Unless there’s something going on that isn’t mentioned (other substantial debt, lots of younger siblings, etc.), shouldn’t the Maacks be able to manage this (especially if their daughter works)?

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  3. For the first year the Maacks will spend $16,000 (savings) plus $5,000 loan to pay the approx $23,000 that is not covered by grants and scholarships.

    Subsequent years will require a total of about $75,000 (costs will likely rise each year). Here’s my guess as to where the money’s coming from:

    $15,000 – daughter’s employment
    $15,000 – paid out of current income (it’s probably all they *can* swing, between taxes and other expenses taking a bite out of out of $110,000 gross income)
    $45,000 – loans

    And they should hope the daughter doesn’t take 5 years to graduate!

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  4. The daughter can only make $5k a year? (Maybe she really can’t if she has to do unpaid internships.) The parents can only contribute $5k a year?

    I suppose it makes a big difference whether food and board are part of that figure. If food and board are figured in, then $5k for the daughter and $5k for the parents looks kind of small, but if food and board are on top of the $75k total, I can see how it might genuinely be a stretch.

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  5. I got that $5,000 figure from averaging 10 hours/week at $10/hour, but adding in full-time summer work could bump it up closer to $10,000. I think it’s hit or miss on whether college kids can get full-time well-paying jobs in the summer, although a kid who hustles should be able to. What do you think is reasonable?

    The $5,000/year from the parents came from seeing that they had only saved $16,000 total even though they had started putting money away when their daughter was born. All sorts of circumstances could account for being unable to contribute more, including poor budgeting, aggressively saving towards retirement, and/or typical American spending habits.

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  6. “What do you think is reasonable?”

    I think options vary a lot, both with regard to the amount of hours students can work and their ability to legitimately combine work with study. I was a bit shocked recently to read a campus ad advertising for life guards for the college pool at $8 an hour. Life-saving for $8 an hour! Given all the less responsible campus jobs that allow for hitting the books while on the clock, I think that’s really bad. Babysitting pays at least $10 an hour and evening babysitting while the kids are asleep allows for multitasking. I believe some internships pay rather well.

    I personally made a lot of money working in my parents’ store summers as a college student ($10 an hour, plus overtime, plus bonuses on record days), but of course I was the bosses’ kid, and there certainly were tax considerations in play. The store is in the middle of nowhere (but on a heavily used road to the National Park), so there wasn’t anywhere to go or anything to spend money on (my sister and I would make for the nearest small city once or twice a summer). Oh, how sad it was to get all that money at the end of the summer and then write a check for roughly that amount to my college my last year!

    I didn’t work on campus after a brief and inglorious career as the world’s worst work study student my freshman year–I called in busy whenever I had a paper deadline, and eventually just faded away. That year I was in an intensive honors program and I really didn’t have the time for the work study position. In subsequent years, it was probably more a time management thing. I worked really hard during the summers, though. (The summer before I went to college, we were painting the exterior of the store until 10 PM with illumination from headlights. I don’t think I got paid that summer, either.)

    “The $5,000/year from the parents came from seeing that they had only saved $16,000 total even though they had started putting money away when their daughter was born.”

    Yeah. Or previous stretches of unemployment or lots of younger siblings. Still…

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  7. One college kid I know made $10/hour working at a local country club dining hall last summer, and he felt lucky to get that job. He scrambled to get 20 hours a week, but sometimes he was only called in to work one or two six-hour shifts per week. This year he’s interning for no pay, but getting valuable experience that may make a difference in securing a job after graduation.

    But here’s my general opinion, which might jive with yours. Many families are living “above their means” and not saving enough, and many kids are not hustling to earn college money.

    OTOH, I regret that I had to work so many hours when I was in college. It was limiting.

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  8. “But here’s my general opinion, which might jive with yours. Many families are living “above their means” and not saving enough, and many kids are not hustling to earn college money.”

    My cousin who dropped out of medical school never, ever had to work on campus or during the summer as an undergraduate. That was probably a factor in her initial complete obliviousness to the fact that she was going to have to pay the medical school loans all back.

    It’s kind of crazy to bring up your kids as if they were minor European royalty without having the money to follow through.

    “OTOH, I regret that I had to work so many hours when I was in college. It was limiting.”

    I’m surprised you managed so well working while in a science program. I know that just doing a science major by itself can eliminate a lot of options (like study abroad).

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