As noted in a recent news article, college graduates are drowning in debt. Nationwide, student loan debt is currently $870 billion dollars, and a report from the Project on Student Debt estimates that the average student with loans graduates $24,000 in the hole.
But how do these numbers relate to Maine students? Surely the situation in our state isn’t that serious, right?
Actually, it’s worse.
According to the Project on Student Debt, Maine currently ranks third in the nation for average debt load of college graduates. Maine’s college class of 2009, the group used in the study, had a whopping debt load of $29,143. Around 65 percent of students graduating from Maine colleges have debt. Further, the University of Maine, the largest public university in the state, was on the list of public universities with the highest debt in the country.
While it is difficult for the typical college student to graduate without some level of debt these days, it is important that students be aware of how borrowing will impact their future. Excessive debt repayments may limit career choices, delay important life choices such as the purchase of a house and reduce the opportunity to take risks. This is tough news for a state that prides itself on small business and entrepreneurship.
A commonly used rule of thumb is to limit total loan debt to the estimated first year of work income. Using that limit, a student who might expect to make $30,000 at their first job out of school could responsibly borrow up to $30,000. While this is a helpful guideline, that measure still is a bit abstract for most college students.
A better estimate to measure a loan’s impact on the future is this: each $1,000 borrowed for education will cost roughly $10 per month to repay on a typical 10-year repayment plan. So the $29,000 that Maine students borrow will actually cost them about $290 per month, every month, for the next ten years. Likewise, a $60,000 debt load — which is not unheard of — will cost $600 per month.
Suddenly all that borrowing isn’t looking so good.
There are a few steps that students can take to reduce their debt load, including making financial assistance a priority when choosing a college and minimizing borrowing for nontuition expenses. But by far the best way to reduce the amount you owe is to increase the amount you pay, through scholarships.
Scholarships, such as those held by the Maine Community Foundation, can help bridge the gap between college financial aid and the cost of attendance. The time it takes to fill out an application could be repaid handsomely: the average community foundation scholarship in 2011 was $1,400.
Many students are reluctant to take the time to apply for scholarships unless the reward is large, such as a $5,000 scholarship or more. But even smaller awards, such as $500, can help reduce the amount a student needs to borrow. Ask a 2011 recipient of multiple Maine Community Foundation scholarships: She pieced together nearly $10,000 in aid from five separate scholarship funds.
Students can find scholarships by searching the Maine Community Foundation website, visiting the website of the Finance Authority of Maine and talking with their local guidance counselor.
An educated work force that isn’t drowning in debt benefits us all.
Cherie Galyean is scholarship manager at the Maine Community Foundation.
Too many recent High School graduates go to college simply because they don’t know what else to do. While the current job market makes college an easy short term choice, the financial consequences of taking on too much student loan debt without a clear path towards long term repayment can be dire. Higher education as a path toward a 30 year repayment of interest on one’s student loan debt is not a pathway to the middle class. A national or state sponsored service program for recent high school grads with a GI Bill type system is a start. One huge plus to a national system could be equalizing the burden for military service. State sponsored community service programs for tuition credits may be a solution. Universities should also take more time and resources to ensure that graduates are ready and able to find a job.
First and foremost there are too many attending college that are ill prepared or simply not qualified to undertake a degree program that will ensure they are able to make a living when they get the degree. When they find they cannot hack it in something like engineering they drop back into what many call “basket weaving” degree programs. As a result they graduate with a degree which does not qualify them to do anything in the private sector.
Someone should do a study of how many graduates in such degree programs are actually employed in jobs that use their major.
A good associate degree from a community college would qualify them to do something useful and would be significantly less expensive.
Finally, many, if not most, high school graduates should be required to do something to earn support in any associate, bachelor or advanced degree such as military or other useful service. That would give them chance to grow up and to learn what they really want to do in life. There is no future in “basket weaving!”
All of that government money pumped into loans does NOTHING to make college more affordable. The capitalists in the ivory towers just continue to raise the cost to whatever the market will bear INCLUDING the loans. Since the government quest to make college more affordable it’s done nothing but become less so.
“capitalists in the ivory towers”…I thought academia was the last bastion of socialism! If there is a single place where capitalism is a dirty word, it is in our ivory towers.
Sorry, wrong answer.
“Capitalists in the ivory towers” refers to the business end of Colleges and Universities not the acedemics/professors.
Business people decide how much it costs to run a college/university and the come up with the amount each student pays in order to create a profit for the college and it’s shareholders if it is a for-profit college.
What percentage of colleges and universities are for profit.
Who screams the loudest when benefits and wage increases are threatened? Take a look at what your “humble” professors earn in these so-called nonprofit institutions. Oh, I get it . You actually have to sell something worthwhile in order to call the earnings a profit?
Show me sources that state wages being considered profits, I am pretty sure you won’t find any.
A very simple definition for the word “Profit” could be; leaving with more than what you brought. Or; getting more in return for what you paid. Does it really matter the source of the money? Be it from taxpayers or consumers, the person on the receiving end is in effect “making a profit.”
Profit: the excess of returns over expenditure in a transaction or series of transactions; especially : the excess of the selling price of goods over their cos.What you consider to be a “simple definition” doesn’t matter. The real definition is clear.
So, how is my simplified definition different in meaning?
Because stealing could fit your definition just as easily.
Ie. I went into the store with nothing and left with stuff I had shoplifted.
So you finally get it!
You mean professors at UMO? Oh yeah, they’re really rolling in it…
They do pretty well for so-called “knowledge generation.” I don’t get paid a dang thing for my B.S.
So you blame professors who are using their degrees, most having PhD’s or Doctorates, for you not getting benefit from your B.S.
I’m sorry, I did not mean bachelor’s of science by B.S. Though, I suppose I could get some benefit from it if I mixed it with the soil in my garden.
If that were true then the cost of college wouldn’t be rising at twice the rate of inflation for the last 20 years, but don’t get any facts get in your way. The academics like to think they’re not capitalists, but by charging whatever the market will bear they prove that they’re just a bunch of evil capitalist pigs.
There are a lot of reasons costs have risen, but profit is not one of them. 95% of colleges are nonprofit. Admin costs have risen tremendously, which is a shame, while subsidies from states (for public universities) has shrunk. Believe what you want, though.
please cite where you got 95% from. colleges always seek to make “profit” if they can take in more money then they spend on teacher/admin salary they can put that money back into new facilities to attract more students and better faculty then get bigger research grants and more prestige. money is just the vessel for prestige which, is the commodity which equates to wealth in academic industry.
That’s not profit. Profit is the surplus revenue after costs that are returned to shareholders/owners.
Like I said money is just a vessel. However administrator salaries rise. Deans and presidents tend to become fairly wealthy if they werent so already haha. “public” schools won’t show profits in the economic sense because like you said there are no owners shareholders. So in order to not have surplus revenues universities dump it into whatever they can. atheltic fields, new buildings, offices, dorms, pensions, salaries, ad campaigns you name it.
Also please cite your source hommie.
Honestly just a guess, but I could name 100 non-profit colleges and maybe 2 for-profit universities. Can you name more than 10 for-profit institutions?
And how is plugging money into “dorms” profit? Dorms are for the students who pay the fee. It is the product they are paying for! If it costs too much, don’t buy!
Colleges charge whatever the market will bear. When everyone gets loans then the value of the loan is added to what the market will bear. If not for the government distorting the market then the cost of college couldn’t rise as fast as it has. This is simple economics. Colleges have zero incentive to keep costs down.
Right answer when the hypocrisy is honestly noted.
Easy money is always a problem. Give 18-year-olds the option to borrow endlessly without regard to payback plan and, well, you have the problem of runaway debt. No different than the housing bubble, where lenders didn’t consider the risk (in the case of student loans, because it’s the government) and buyers who take the easy money because someone is offering…
Plus the fact that if you want to earn more than $10 an hour you need a college education even more today then in the past and if a student does not have the means to pay for college themselves they must borrow the money. Colleges don’t teach on credit.
Well if the $10/hour bit is true, then I guess college, even though it’s very expensive, is worth the investment. Your choice: buy the product or don’t.
Just look at the Help Wanted Ads right on this website to see that non-college degree jobs are at $10 or less per hour. SUre you can find some that pay a little more but nowhere near a decent livable wage.
When choosing a college, avoid University of Maine like the plague unless you are hired as a “mystery shopper” to attend tuition-free and report questionable practices. UM is a financial institution first with academics second.
same with UNH, my school. Pretty much any big state university. my friends from URI UMASS and UCONN all said the same thing.
look @ all the unemployed college grads commenting on BDN!