Student loan interest rates seen as a paralyzing price-tag for prestige
Jen Lambert thought she was doing what she was supposed to do when she packed up her belongings and moved to Los Angeles, Calif., after graduation. She had just received her bachelor’s degree in psychology from the University of Oregon and was ready to put it to use.
Her idealistic escape to L.A. was a fist-fight from the start against a job market that could knock out Muhammad Ali. Rent was $1,000 a month without utilities, and the overall cost of living was way more expensive than anticipated. She was only working as an underpaid temp at a couple of businesses. As her credit card and direct student loan payments were piling up, she received an unexpected notice in the mail that her Perkins Student Loan payment was past due. Her paycheck was already leaving her no money for food or living — she couldn’t afford to make another payment on a different loan.
Eight months later, she was back in Eugene.
“I felt like a failure,” Lambert said. “The first few months after graduation is the time that you’re looking for a job that you want, and you want to travel and live like you wanted to, but it’s also the time that you have to start paying back your student loans.”
Now, she has a job in the School of Architecture and Allied Arts as an administrative assistant and lives with a coworker. She works eight-to-five and gets just enough money to pay for her credit card and the minimum on her loan bills.
“The minimum doesn’t even cover my principle balance,” she said, who graduated with approximately $25,000 in debt. “The $250 a month I’m paying is going into thin air.”
It’s these interest rates that are compounding against graduates now and will continue to for future classes. At the UO this past year, tuition was set to take on a six-percent increase due to a lack of state funding — retaining and improving the UO’s academic experience, according to Roger Thompson,@@[email protected]@ the vice provost for enrollment management at the UO.
“We were trying to find out at what level we could increase tuition to cover the state appropriation decrease while also not burdening students and families too much,” Thompson said.
He noted that for an Oregon resident going to the UO, a six-percent increase in tuition would be a couple of hundred dollars. But, that same student going to school an extra year would be a couple thousand dollars.
He explained that the UO is taking the aggressive approach of increasing tuition to allow more opportunity for students to take the courses that he or she would need in order to graduate on time, therefore reducing the chance of needing to attend the UO for an extra year.@@[email protected]@
If a student drops out, then all of the money that he or she spend on education is wasted because employers would not recognize that a person had finished most of an education.
“It’s really critical today because we have some many students today who end up with more loan indebtedness,” he said. “The worst thing that can happen to a student is taking on the loan debt without earning the degree that gives them the financial ability to pay it back.”
Jim Brooks,@@[email protected]@ the director of student financial aid and scholarships at the UO, is dedicated to giving students an affordable plan to keep them in school. It’s his job to direct roughly $230,000,000 of financial aid money to 59 percent of the UO population to help with costs incurred by attendance.
“In Oregon, it’s been a bigger (financial) cut than it has been in other states, but everybody is experiencing (decreased funding from the state),” Brooks said. “So, all schools across the country are looking at how they can keep tuition down while still providing the level of education and resources that students need in order to complete their degree.”
He also believes students are going to be key to keep rates lower.
“I want to encourage students to let their voices be heard, not just by the university but at the federal level,” he said. “I think that puts some pressure on Congress this year to extend the lower interest rate another year. If students back off, it would be too easy for Congress to go ahead and raise the rates going forward.”
Lambert explains that she is making significant progress on her credit cards and has one paid off. Her next one will hopefully be paid off in the next two months. Then, it’s years of chipping away at the loans she looked forward to receiving so fondly in college.
“When you have student loans,” she said, “you get your student loan check every month and think, ‘Oh, it’s so great I have this money now. I can eat, I can buy some clothes, I can do whatever I want with it. Then, after college, you’re not getting paid any more — you’re getting charged for it. Things that seemed so easy before, like going out for food, just don’t happen because it’s another expense.”