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College debt rising faster
than tuition, fee increases
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Natasha Khachatourians has so much student debt that she’s
working two jobs. Eight hours a day, she staffs the front window at
Seattle University’s financial-aid office. Three nights a
week she’s at her second job, working at Lovers Package until
10:30. Saturdays she pulls another eight-hour shift at the
adult-entertainment store.
She’s barely staying afloat. Khachatourians, 23, graduated
from Seattle University last year, and her debt tally is $60,000 in
education loans, plus $4,500 on four credit cards. After
consolidating her federal loans, her education payments are $300 a
month.
“I eat a lot of bread,” she says. “It’s
cheap.”
Her predicament reflects that of many college graduates: Students
are leaving college owing more and more, and that swelling debt is
outpacing the rise in other higher-education costs.
“It means the most educated individuals in our society, who
would go out and do the best financially, are also the ones
entering their careers with the heaviest debt we’ve ever
asked our graduates to carry,” said Douglas Breithaupt,
president of the College Planning Network, a Seattle nonprofit.
Nationally, the average debtload for undergraduates had reached
$18,900 in 2002, according to the most recent survey by lender
Nellie Mae.
“The rising cost of higher education is partially driving
it,” says Jim White, director of financial aid at Seattle
University.
Prices have gone up at public and private four-year colleges across
the country, albeit more slowly than debt levels. While debt was
rising 66 percent between 1997 and 2002, the average tuition
increased by 22.5 percent nationally at four-year public colleges,
according to the College Board.
The University of Washington’s in-state tuition went up 11.7
percent in the same period. At a private university like Seattle
U., tuition has risen as much as 6 percent each year.
But tuition increases aren’t the only reason behind the rise
in student debt, White says.
“Culturally we’ve changed our minds about what we
expect to have when we’re in college,” SU’s White
said. “Twenty years ago, students were more inclined to share
a home, not have a car, didn’t have a cell phone, whereas
now, students coming out of high school have an
expectation.”
Maximum loan amounts under federal programs have not changed in the
past 14 years. As a result, students are turning to private lenders
to finance their education.
Western Washington University estimates that its students received
$517,708 from private lenders in the 1999-2000 school year. That
number increased to $2.1 million in the school year that ended this
summer.
Many students, like Khachatourians, feel the loans are worth what
they got out of college.
She knows it was her choice to attend and pay the price of a
private university. Seattle University’s tuition runs $21,285
a year.
She grew up in Las Vegas, where the two state universities
didn’t offer the quality of education she wanted. Attending a
public university in another state would have cost as much in
out-of-state tuition as at a private school, so she chose the
latter, pursuing an English major and minoring in criminal
justice.
Her parents couldn’t help pay her tuition. She applied for
the available federal loans, the Stafford and the Perkins. Those
loans didn’t cover her tuition, so she went to private
lenders Sallie Mae and American Education Services.
During the school year, she took a work-study job and worked the
maximum 20 hours a week for about $8 an hour.
“It wasn’t giving me the capacity to save up,”
she said. “It’s just a Catch-22.”
Cassandra Russell graduated from Pacific Lutheran University in
Tacoma this summer and owes about $70,000.
“I’m paying $18,000 (a year) more than someone going to
a state-run university,” she said. “But the quality of
education and what was available to me was incredible.”
She loved her professors, and the school offered free counseling
services when her father passed away and then her mother and sister
became seriously ill.
And although the job hunt has been competitive because of the tight
market, she feels optimistic about finding something in public
relations. She plans to live at home with her mother while she pays
down her student loan and starts saving up for a house.
Graduates in high-demand fields also are less concerned. Herb
LeBeau transferred from Seattle Central Community College to
Seattle University and majored in engineering. He owes about
$20,000, but he’s not worried.
“I should be able to make pretty good money once I start
working,” he said.
Martha Holler, a spokeswoman for lender Sallie Mae, points out that
compared to car loans, home mortgages and credit cards, education
loans offer lower interest rates. Currently the interest rate is
about 3.4 percent, she said.
Overall, higher education remains an attractive investment.
According to Postsecondary Education Opportunity, the median income
for a college graduate in 2003 was $48,896, compared to $29,800 for
a high-school graduate.
Khachatourians doesn’t think a four-year degree guarantees a
well-paying job. So she’s starting a part-time
master’s-degree program in public administration at Seattle
University in January. The school will pay for some of the credits
because she works there.
She’s going to be taking $13,000 in loans to pay for the
first two quarters.
Sharon Pian Chan
The Seattle Times
