College graduate's loan debt climbs to record levels

College graduate's loan debt climbs to record levels

Jessica Hiddleson never thought she'd be on food stamps after graduating from college.

But with $18,000 in student loan debt and a part-time minimum wage job, the 22-year-old needed the help. She deferred her loan payments, but she still can't afford her rent in Ashland, so she's moving home to Albany and her parents next month.

Hiddleson and other new college graduates are getting a tough reality check as they hit the toughest job market in decades while saddled with record loan debt.

A national report released Tuesday shows just how hard it is for them: More than 60 percent of Oregon's 2008 graduates in public and private colleges took loans averaging $21,029. That is the 22nd highest debt rate in the nation, and just slightly lower than the national average – a record high of $23,200.

Aggravating the problem is their difficulty in finding jobs that enable them to pay off their loans. National unemployment rates  for college graduates ages 20 to 24 rose from 7.6 percent in 2008 to 10.6 percent this year, according to the report by The Project on Student Debt, part of the Berkeley-based Institute for College Access & Success.

"It's pretty rough," said Hiddleson, who graduated from Southern Oregon University in June. "I'm pretty much taking whatever jobs I can get, and I'm thankful for them."

Oregon doubled the funding for state grants for college students in 2008-09 with the intent of lowering the student debt load for graduates. Since then, state funding has fallen and record numbers of students have applied for aid, causing the state to turn down some eligible students and reduce grants to others.

At the same time, tuition has gone up significantly. Many campuses have increased financial aid to ease the impact on low-income students.

At Oregon State University and the University of Oregon, new financial aid programs cover the full price of tuition and fees for low-income students. Those programs might help lower the average debt loads at those schools in the future, financial aid officials at both schools said.

More than 800 UO students and 3,000 OSU students are in the programs this year.

"Even if tuition does go up, our neediest students will not feel like their loan indebtedness will be a hurdle for them," said Elizabeth Bickford, UO's director of student financial aid and scholarships.

Her counterpart at OSU, Doug Severs, said he recommends students look carefully at their expected earnings after graduation and monthly loan payments before taking out student loans.

Still, over a lifetime, they will earn more with a college degree than without one.

"I haven't seen a student who said, 'I'm not going to go to college because of this level of debt,'" he said.

Aaron Powell, a junior at Portland State University, did everything he could to keep his college costs down: He delayed college to join the U.S. Army and get GI Bill benefits; he started at a community college where tuition is lower, and he now works part-time.

But Powell, 27, still expects to graduate owing $20,000 in student loans, a debt load that might prevent him from going to law school.

"It really comes down to dollars and cents," he said. "Am I going to have enough money to finish my four-year degree and go on to law school?"

He also has about $22,000 in personal debt and he's considering filing for bankruptcy.

"I'm already in the red now," he said. "If they increase (tuition), I'm done."

Reed College reported the state's lowest debt load, $17,296, and the highest tuition, $36,420, in 2008.

Reed limits loans because "it's certainly more attractive to look at Ph.D programs when you're $17,000 in debt than when you're $40,000 in debt," said spokesman Kevin Myers. "That's a big mountain"

Reed plans to spend $18.5 million on financial aid this school year, up from $12.9 million five years ago.

Graduates of Southern Oregon University in Ashland had the highest reported debt load in the public university system in 2008, despite having the lowest tuition that year, according to the report.

SOU's spokesman, Jim Beaver, said he suspects the reported $26,000 average debt load is not accurate, but he could not reach financial aid officials Tuesday to check it.

Hiddleson put off law school or graduate school to give herself time to work and pay off some of her undergraduate loans. But she can't do that with a part-time job  that pays $8.40 an hour, the state's minimum wage, as an arts and crafts coordinator for an after-school program.

She applied to join the Peace Corps, which would allow her to defer her loans again and cancel some of what she owes.

"I wanted to do service for two years and think about what to do for the rest of my life," she said.

Hope this can be solved at a very short period.